22 May 2016

Small Business Confidence Hits 10-month High

A web survey by the Canadian Federation of Independent Businesses (CFIB) showed small business confidence rebounded nearly seven points in April, climbing to 59.2. The highest since June of last year.

“While we often see spikes in a single month of data, the size of this increase suggests the long-awaited confidence normalization has begun,” Ted Mallett, CFIB chief economist, said on their website.

On a scale between 0 and 100, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. When the economy is growing at its potential, one normally sees an index level of between 65 and 70.

  • Prince Edward Island rose to 70.8, the best in the country
  • British Columbia climbed three points in April, reaching 65.4, good for second highest
  • Alberta stopped its four-month slide, increasing two points to 28.6, though still has the lowest confidence in the country by far
  • Saskatchewan saw a small improvement to 48.8
  • Manitoba held steady at 54.0.
  • Ontario jumped five points to 62.6
  • Quebec slipped three to 62.2
  • Newfoundland and Labrador fell to a new provincial record low at 46.4
  • Nova Scotia fell a point to 64.6
  • New Brunswick’s confidence increased four points to 57.5.

“While confidence is up, it should be taken with a grain of salt,” added Mallett. “There is stability in the sectors, but a look at order books and accounts receivables still shows that business conditions remain fragile, which is part of the reason why hiring plans still aren’t as robust as we normally see this time of year.”

Hospitality is the most optimistic sector, followed by information, arts and recreation, and professional services.

The natural resources sector remains the weakest in the country, followed by agriculture and transportation. 

The seasonally adjusted Ivey PMI for Canada reflected similar results - it went up to 53.1 in April of 2016 from 50.1 in the previous month.

According to surveys done by the Conference Board of Canada, the Index of Consumer Confidence rose 2.3 points in April to 94.5. This was the third consecutive gain for the index, suggesting that Canadian consumers are feeling more upbeat about the economy than they were in January.

While results from the Conference Board of Canada’s spring 2016 Survey of Business Confidence “suggest that Canadian business leaders continue to feel the pressure of chilling headwinds from global commodities markets.”

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