Business Confidence Steady, But Historically Low

Small business confidence remained steady in February, with a half point increase to 51.7 on the long-term optimism index, but still at its historical low outside of recessions, says the Canadian Federation of Independent Business’ (CFIB) ‘Business Barometer.’ One in two business owners reported revenues were below normal for this time of year, with only one third of businesses making normal profits. A share of 58 per cent are still holding some pandemic-related debt, at an average of $106,000, showing no meaningful improvement since November readings of 58 per cent and $114,000. Expenditures are also under pressure, with close to six in 10 businesses reporting they are above normal. The shares of businesses struggling with energy (69 per cent), wage (63 per cent), insurance (59 per cent), and product input (45 per cent) costs are all above their historical averages. A total of 38 per cent of businesses are now citing borrowing costs as a challenge, a new historical high and double the share from 12 months ago. In response to the current inflationary situation, businesses expect to increase wages by 3.3 per cent over the next 12 months, compared to January’s three per cent, while average price plans have reached 3.7 per cent, a small uptick from 3.5 per cent last month. CFIB says the overall sectoral picture is stable and positive, however, with minimal changes in confidence from January.