Highest Short-Term Optimism for SMEs Since COVID
Small businesses saw upticks in optimism and were feeling more confident in March, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer®. The 3-month index improved by 6 points to 60.2, the highest level since before the pandemic. The 12-month optimism index rose by 2 points to 65.1.
March Business Barometer®: March findings are based on 756 responses from a stratified random sample of CFIB members to a controlled-access web survey. Data reflect responses received March 3-14. Findings are statistically accurate to +/- 3.6%, 19 times in 20. Every new month, the entire series of indicators is recalculated for the previous month to include all survey responses received during that last month.
“Small businesses are starting to feel more optimistic as many restrictions are lifted across the country, signalling a new phase of this pandemic. However, other indicators of business health show that there are many concerns on the horizon, namely higher costs, supply chain challenges, and labour shortages, which may hold back business recovery,” said Simon Gaudreault, Vice President of National Research at CFIB.
Three in ten businesses (34%) reported being in good shape, while 22% indicated being in poor shape. Price and wage plans continued their upward trend, with businesses predicting they would increase prices by an average of 4.7% over the next year, while wage plans have increased to 3.1%.
Businesses still facing cost pressures
Businesses face significant cost pressures that may slow their recovery, growth, and return to pre-pandemic sales levels despite the uptick in optimism. Fuel and energy costs were significant cost constraints for 72% of businesses, a 7% jump in one month. The shares of companies with wage, insurance, and product input costs are also on an upward trend.
Supply chain issues and labour shortages also continued to cause challenges for businesses in March.
“It’s good to see small business owners express optimism for the future after the last two years of the pandemic,” said Andreea Bourgeois, Director of Economics at CFIB. “However, that does not mean they are in a good position to absorb new costs. With the federal carbon tax set to increase April 1 and governments already planning to add various other new costs, businesses are still facing obstacles that hinder their success.”