Although small businesses in British Columbia are still feeling less optimistic than they were two years ago, their outlook has improved over the past month, according to the Canadian Federation of Independent Business.
The CFIB Business Barometer index increased almost three points to 65.7 in B.C. in October. This is the second-highest level in Canada after Nova Scotia (68.0) and almost seven points higher than the Canadian average of 58.9.
Twenty per cent of B.C. small business owners say they plan to hire more staff in the near future, and 4% say they intend to cut back. Almost half of all owners in B.C. – 47% – say their businesses are in good shape while only 12% say they are in bad shape.
Thirty seven per cent of owners in B.C. say a shortage of skilled labour is the biggest challenge to sales or production, followed by insufficient domestic demand (33%) and management skills and time constraints (24%). Tax and regulatory costs (52%), as well as wage costs (42%) and insurance cots (42%) are the main financial cost constraints.
Business Barometer Index in B.C., presented as 3-month moving average, based on 252 responses
Source: CFIB
Nationally, the Business Barometer index increased for the first time in four months in October, growing three points to 58.9.
“This breath of optimism could…be related to the Canadian Federal elections won by the Liberal party, led by Justin Trudeau,” said Diarra Sourang, economic analyst at TD Economics. “Indeed, during the campaign, the leading parties all promised to reduce the small business tax rate from the current 11% to 9% in 2019.
“On the other hand, with the Liberal win, small businesses have to factor in lower reductions of EI premiums than previously announced (-12% versus -21% under the budget published in April 2015).”
Sourang said that while this growth is welcome after so many months of decline, it is still not enough to make up the ground lost year-to-date. It does, however, reaffirm TD’s forecast for real GDP growth of 2.3% for the year.
The highest levels of optimism are found in the financial, insurance and real estate sector (64.2), the information, arts and recreation (61.9) and construction (61.0). Not surprisingly given the slump in oil prices, the lowest levels of optimism are found in the natural resources sector (31.4). This is the only sector with an index below 50.
Canadian Business Barometer Index and GDP
Source: CFIB
Across Canada, only 16% of businesses say they plan to hire in the next few months, and 15% say they intend to cut their workforces. The highest levels of optimism are found in the financial, insurance and real estate sector (64.2), the information, arts and recreation (61.9) and construction (61.0). Not surprisingly given the slump in oil prices, the lowest levels of optimism are found in the natural resources sector (31.4). This is the only sector with an index below 50.
The Business Barometer index measures small business owners’ sentiments about how their companies are likely to perform in the next year. An index over 50 means the owners expect conditions to improve. Nationally, the index is normally between 65 and 70, a number that indicates the economy is growing at its optimum level.
