Labour Shortages, Gas Prices Hurt Small Business Confidence

Small business confidence has dropped as labour shortages, fuel and energy costs pose major challenges.

This is according to the Canadian Federation of Independent Business’ (CFIB) latest Business Barometer report. The 12-month outlook fell by three index points to 61.6, while the three-month optimism index dipped to 58.8, a loss of two points since April.

Despite this, the general state of business is on the upswing and better than in previous months, with 43 per cent of businesses reporting being in a good state, compared to 16 per cent who said they were in bad shape.

“It’s encouraging to see more businesses being in good health after the last two years of uncertainty,” says CFIB director of economics, Andreea Bourgeois. “However, some businesses still have a long way to go, with certain sectors, such as retail and agriculture, feeling particularly less optimistic about the future.”

Almost all provinces were more optimistic over the short-term, except Ontario, where businesses saw the biggest decrease (5.6 points), and Quebec. Among sectors, hospitality saw the biggest short-term jump, up almost 10 points to 69.9, while retail had a sharp drop of seven points to 53.3.

Full-time staffing plans are positive, with 30 per cent of businesses planning to hire in the next three months. The share of businesses saying they will cut back has not changed since April. Price plans remain high but stable, while wage increase plans have reached 3.5 per cent.

“We see some positive improvements in certain provinces and sectors, (but) businesses continue facing challenges, from a shortage of skilled workers to wage and price hikes, that prevent them from fully recovering,” says CFIB vice-president of research and chief economist, Simon Gaudreault. “These concerns have businesses feeling nervous and uncertain about what the future holds for them.”

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