Small business confidence took a major dive in January, according to the Canadian Federation of Independent Business (CFIB)’s Business Barometer.
The 12-month index fell to 54.3, while the three-month index reached 36.9, both consistent with the preliminary results CFIB released mid-month. In addition to concerns about renewed restrictions and ongoing labour shortages, many businesses are reporting supply chain challenges.
“There has been no improvement in small business outlook since the start of the month,” said Simon Gaudreault, vice-president of national research at CFIB.
“The retail, hospitality and personal services sectors are particularly uncertain about the future.”
Businesses in the retail sector are the least optimistic over the next three months at 30.4 index points, a nine point drop since December. The short-term outlook in the hospitality (32.0), personal services (39.3) and health and education services (41.8) sectors is also low.
Full-time staffing plans are still in the negative, with 23 percent of businesses predicting layoffs in the next three months, and only 16 percent planning to hire. Other indicators of business health also maintained their low readings from the beginning of the month.
The shares of businesses reporting shortages of input products (29 percent) and distribution constraints (23 percent) as a major factor limiting their growth remain elevated. In addition, unsold inventories contracted to 58 percent this month compared to 68 percent in December.
“Small businesses have been experiencing supply chain challenges, from a shortage of products to increasing input costs, since the middle of 2021, but the issue is now gaining momentum,” added Andreea Bourgeois, Director of Economics at CFIB.
“This only adds to the uncertainty many small businesses are facing.”
January findings are based on 1,110 responses from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received from January 6 to the 20th. Findings are statistically accurate to +/- 2.9 percent 19 times in 20.