SIMON GAUDREAULT
OTTAWA – Small business confidence fell for the fourth month in a row, marking a significant decline over June results, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer®. The 3-month index fell nearly 8 points to 46.7, while the 12-month index fell nearly 7 points to 52.7 in July.
“Businesses are really feeling the pressure of inflation right now, with both price and wage increase plans at all-time highs and growing concern over labour shortages and input costs, particularly fuel and energy,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. “Worse still, they don’t feel heard – only 16 per cent believe the federal government understands the cost pressures they face, according to a recent CFIB survey. It’s no wonder they are feeling anxious about the future.”
Only 32 per cent of businesses say they are in good shape, while 20 per cent say they are in bad shape. Full-time hiring plans continue to narrow, with 20 per cent of firms looking to hire over the next three months and 17 per cent looking to lay off staff. Average price increase plans (4.7 per cent) and wage increase plans (3.4 per cent) are still coasting at historically high levels.
The major limitation on business growth is by far labour shortages (52 per cent for shortages of skilled workers and 39 per cent for semi- or unskilled workers). Fuel and energy costs have maintained their spot as the top cost constraint currently affecting the majority of small firms (76 per cent).
All provinces and nearly all sectors experienced short-term drops in optimism this month, but businesses in Ontario (44.7) and Newfoundland and Labrador (45.7), and those in agriculture (37.7) and retail (38.7) were the least optimistic. While hospitality businesses (59.1) posted the highest sectoral confidence level, they experienced a 9-point drop over last month.
“These indicators should serve as a serious warning to governments that businesses are struggling,” added Andreea Bourgeois, Director of Economics at CFIB. “They should be factoring this into their economic and policy decisions in the months ahead, as businesses can’t handle any more pressure.”
