Small businesses in British Columbia reported feeling slightly less optimistic in February than they did a month ago, according to a Canadian Federation of Independent Business (CFIB) survey released February 23.
The CFIB Business Barometer index for B.C. slipped to 63.7, down from 65.2 in January. Optimism in B.C. remains slightly higher than the national average of 62.9, but the gap is narrowing; last month, B.C.’s reading was five points higher than average.
Eighteen per cent of small business owners in B.C. say they plan to hire more staff in the next three months, while 7% say they plan to decrease their payrolls. Overall, 49% say their companies are in good shape, compared with 8% who say their companies are not faring well.
A shortage of skilled labour is the top challenge for small businesses, with 39% of those surveyed saying this is their biggest concern. In second place was insufficient domestic demand (34%), followed by management skills and time constraints (26%).
The biggest cost constraints were cited as tax and regulatory costs (59%), insurance costs (42%) and wage costs (41%).
Business Barometer Index in B.C., presented as 3-month moving average, based on 273 responses
Source: CFIB
Across Canada, business optimism jumped from 60.1 in January to 62.9 – up 8.2 points year-over-year and the highest reading since January 2015.
“February’s improvement, which brought the headline measure to a two-year high, is encouraging, especially when contrasted with the lack of significant progress in the prior 10 months,” said TD economic analyst Admir Kolaj. “This performance was partially supported by continued gains in oil prices, which was reflected in rising confidence in Alberta and Saskatchewan.”
The highest levels of optimism were found in natural resources (69.2), information, arts and recreation (67.9) and wholesale (67.1). Health and education services (56.3), transportation (58.1) and agriculture (58.8) reported the lowest levels.
Business Barometer Index across Canada, presented as 3-month moving average, based on 943 responses
Source CFIB
Across the country, 18% of companies said they intend to hire staff in the next three months, compared with 12% of those who said they plan to cut their staff. Forty per cent of respondents said they felt good about the general state of their companies, while 17% said their businesses are not doing well overall.
Kolaj said although optimism has improved, there is still room for improvement to get to levels reported before the collapse in commodity prices.
“The improving narrative remains nuanced with businesses still cautious, perhaps in light of the rising uncertainty, with employment and investment plans still remaining below par,” he said, pointing out the U.S. was a major source of uncertainty.
“Barring any downside surprises, optimism among Canadian small business owners should continue to improve alongside moderate economic growth, supported by a relatively resilient consumer, competitive loonie, low interest rates and gradually rising oil prices.”
CFIB’s Business Barometer measures small business owners’ sentiment about how their firms will likely perform over the next year. A reading over 50 means the owners expect conditions to improve.
@EmmaHampelBIV
