Small business confidence plummets in December

By Maddie Johnson | January 2, 2020 | Last updated on January 2, 2020
2 min read
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Small business sentiment ended the year on a low note, but still remains optimistic overall, according to a report from Scotiabank.

The report noted that the Canadian Federation of Independent Business’ (CFIB) monthly Business Barometer index hit 55.5 in December — its lowest point in a year, but still in positive territory.

Scotiabank observed that the index has historically moved in tandem with real GDP growth, which got off to a weak start in the fourth quarter of 2019.

The index, which measures the sentiment of small- and medium-sized enterprises (SMEs), declined in eight out of 10 provinces, making negative sentiment more widespread than it was a month earlier. 

New Brunswick and Newfoundland led the declines with 7.5 and 7.1 point drops, respectively, with Newfoundland joining Alberta and Saskatchewan in negative territory in December.

Newfoundland’s index dipped to 47.7, while Alberta and Saskatchewan remained the most pessimistic provinces with index levels of 38.3 and 40, respectively. Confidence rebounded by 2.9 points in British Columbia, but B.C. still had the fourth-lowest index at 55.2.

Scotiabank noted that regional SME sentiment conflicted with the bank’s prediction that Alberta and B.C. will lead all provinces in growth this year.

“In both cases large projects are expected to fuel much of this rebound, but SMEs are still likely to be indirect beneficiaries,” the report stated.

Softer sentiment extended to 10 out of 13 sectors surveyed by the CFIB in December.

Natural resources dropped seven points, bringing it into negative territory alongside agriculture and transportation. Hospitality, wholesale, retail and information, and arts and recreation all also dipped below the national average. Combined, the sectors account for 30% of Canada’s GDP. 

Concerns about general business health hit a three-year low, with only 37.9% of respondents saying their businesses were in good shape.

Insurance costs joined wages, taxes and regulations as a top concerns SMEs had about major cost constraints. Insufficient domestic demand edged closer to skilled labour shortages as limitations on growth.

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Maddie Johnson

Maddie is a freelance writer and editor who has been reporting for since 2019.