Business Barometer®: Small Business Confidence Remains Shaken Amid Rising Costs, Supply-Chain Disruptions And Labour Shortages
BRITISH COLUMBIA – Small businesses are not feeling confident as they enter the last stretch of 2021, says the Canadian Federation of Independent Business (CFIB). CFIB’s October Business Barometer® rose only slightly to 45.5 index points (+2.3) on the three-month outlook, and 60.5 (+2.7) on the 12-month outlook. This follows the biggest drop in short- and long-term confidence since the start of the pandemic in September.
“This is a challenging time for small business owners. Many of them are out of the proverbial frying pan of lockdowns and right into the fire, with rising costs, heavy debt loads, difficulties obtaining supplies and a widespread and persistent shortage of labour” said Simon Gaudreault, Vice-President of National Research at CFIB. “Now the federal government has also withdrawn support from many businesses that still need it but can’t meet the high new bars of entry, adding even more pressure in the context of already very challenging business conditions.”
The increasing cost of doing business (74 per cent), supply chain challenges (63 per cent), labour shortages (54 per cent) and inflation (53 per cent) are the top concerns for small business owners heading into the fall, according to a separate CFIB survey. Only 78 per cent of businesses are currently fully open, 45 per cent are fully staffed and 39 per cent are making normal sales, according to CFIB’s Small Business Recovery Dashboard.
Indicators of business health trend downward
Other CFIB Business Barometer® indicators in October, like the general state of business health, hiring plans and capacity utilization, took a downturn. Wage increase plans remained high but stable at 2.5 per cent, but price increase plans for the next 12 months climbed to an unprecedented 3.9 per cent. Some of this is likely due to current challenges with supply chains and labour shortages, as well as increases in the costs of doing business in general.
“The crisis part of the pandemic may be over, but its echoes continue to destabilize small business recovery and the economy,” added Andreea Bourgeois, Senior Research Analyst at CFIB. “There is still a long way to go for a full recovery. Governments should act accordingly as they adjust business supports and consider adding on new costs for employers and entrepreneurs.”