Small business optimism rises for seventh straight month, remains relatively low amid tough job market

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Toronto, May 25, 2023 – The Long-Term Optimism Index has been on the rise for seven straight months and is at its highest level in almost a year, according to the latest Business Barometer® from the Canadian Federation of Independent Business (CFIB). The 12-month index stood at 56.4 in May.

PEI (75.0) and Newfoundland and Labrador (68.0) had the most optimistic businessmen due to the start of the summer tourist season, while Quebec (48.8) and Saskatchewan (51.9) were at the bottom. on the optimism scale this month. Health and education services (67.6) topped the sector rankings, while Agriculture (45.6) and Finance, insurance, real estate and leasing (45.7) were nearly tied for last.

“Long-term small business optimism has slowly but steadily risen since last November. While the index is still relatively modest and below its historical average of 61, it is encouraging to see some gains in optimism levels,” said Simon Gaudreault, CFIB chief economist and vice president of research. “However, bigger than usual challenges remain, such as sharply lower sales for half of businesses, the record cost of doing business, or a historically tough job market, making it difficult for Main Street to recover.”

While some headwinds have eased, labor shortages and their side effects remain one of the biggest headaches for small businesses. The main constraint to business growth in May continued to be labor shortages (48% due to a shortage of skilled workers and 32% due to semi-skilled or unskilled workers). For example, a CFIB member commented that labor shortages in his business resulted in reduced menu offerings. Another reported a productivity hit after having to train technicians in-house due to a lack of skilled domestic or foreign workers, while a third mentioned having to automate and switch from domestic manufacturing to imported products to cope with higher wages.

Full-time hiring plans have been on a downward trend since March, with 22% of companies looking to hire in the next three months.

“Usually, companies are looking to hire more people before the busy summer season. This month’s dovish indicator suggests that employers are struggling to find qualified staff, or looking for alternatives, in a cooling job market,” said Andreea Bourgeois, CFIB Director of Economics. “However, the good news is that fewer employers (12%) were planning to lay off in the next three months.”

For media inquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
public.affairs@cfib.ca

Methodology:
May Business Barometer®: The May findings are based on 558 responses from a stratified random sample of CFIB members to an access-controlled web survey. Data reflects responses received from May 3-10. Results are statistically accurate to +/- 4.1%, 19 times out of 20. Measured on a scale between 0 and 100, an index above 50 means owners expect stronger business performance in the coming years. three or 12 months outnumber those expecting weaker performance. An index level close to 65 typically indicates that the economy is growing at its potential.

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across all industries and regions. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.