Toronto, May 25, 2023 – The long-term optimism index has been on the rise for seven months in a row and is at the highest level in almost a year, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer®. The 12-month index sat at 56.4 in May.
PEI (75.0) and Newfoundland and Labrador (68.0) had the most upbeat entrepreneurs due to the beginning of the summer tourism season, while Quebec (48.8) and Saskatchewan (51.9) were at the bottom of the optimism scale this month. Health and Education services (67.6) topped the sector rankings, while Agriculture (45.6) and Finance, Insurance, Real Estate and Leasing (45.7) were virtually tied for last place.
“Small business optimism for the long term has been slowly but steadily increasing since last November. While the index is still relatively modest and below its historical average of 61, it’s reassuring to see some gains in optimism levels,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. “However, bigger than usual challenges such as markedly lower sales for half of businesses, the record high cost of doing business, or an historically difficult labor market remains, making it difficult for Main Street to recover.”
While some headwinds have eased, labor shortages and their side effects are still one of the biggest headaches for small businesses. The top limitation on business growth in May continued to be labor shortages (48% for shortages of skilled workers and 32% for semi- or unskilled workers). For example, one CFIB member commented that labor shortages at their business resulted in reduced menu offerings. Another reported a productivity hit after having to train technicians in-house due to a lack of qualified domestic or foreign workers, while a third one mentioned having to automate and swap domestic manufacturing with imported goods in order to cope with higher wages.
Full-time staffing plans have been on a downward trend since March, with 22% of businesses looking to hire in the next three months.
“Usually, businesses are looking to hire more people ahead of the busy summer season. The moderate indicator this month suggests employers are struggling to find qualified staff, or are looking for alternatives, in a cooling labor market,” said Andreea Bourgeois, Director of Economics at CFIB. “The good news though is that fewer employers (12%) were planning to lay off in the next three months.”
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Dariya Baiguzhiyeva, CFIB
May Business Barometer®: May findings are based on 558 responses from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflects responses received from May 3 to 10. Findings are statistically accurate to +/- 4.1 per cent, 19 times in 20. Measured on a scale between 0 and 100, an index above 50 means owners expecting their business’s performance to be stronger over the next three or 12 months outnumber those expecting weaker performance. An index level near 65 normally indicates that the economy is growing at its potential.
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.