Small business confidence has continued to decline throughout November, according to the Canadian Federation of Independent Business (CIFB).
The 12-month outlook index published by CIFB has plummeted to 45.6 points, indicating that small business confidence dipped close to the sub-50 scores seen during the 2008/2009 and 2020 recessions.
Almost all provinces witnessed this decline, with Quebec (42) and Ontario (45.4) registering the lowest optimism levels.
Key sectors such as agriculture (32.4), hospitality (40), retail (40.5), and construction (45.8) also recorded notably low levels of optimism, signaling widespread concerns among various industries.
Simon Gaudreault, CIFB’s chief economist and vice president of research, attributed the drop in confidence levels to “stronger and stronger headwinds.” He pointed to how real estate rates have choked demand and continued to restrict credit conditions. He also cited the added fiscal and regulatory pressure imposed by “governments at all levels.”
“Overall, business conditions have seldom been more challenging for so many businesses,” said Gaudreault. “Something has got to give soon if we want a foundation for an economic rebound in the upcoming year.”
When asked about their top concerns for November, CIFB found that a more significant portion of small businesses were worried about tax and regulation (67%), insurance (60%) and borrowing costs (53%).
The report additionally revealed that small businesses’ average price plans for the next 12 months stood at 3.1% in November, indicating an erratic pattern over the past four months.
Moreover, small firms said they anticipate a 2.6% increase in wages over the next year, returning to historical averages after peaking in the spring of 2022.
Gaudreault acknowledged the limited bright spots in the November results, noting that although labour shortages are gradually easing, they remain a significant cost constraint for most businesses.
“2023 has not been the year of the Great Recovery on Main Street, and hopes will now turn to 2024 to finally provide long-awaited normal business conditions,” he added.
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