Small Business Confidence Edges Up Once Again

Small business confidence rose in September, with the Canadian Federation of Independent Business’s (CFIB) long-term outlook index moving up to 50.2 from August’s 47.8.

While this suggests a slight boost in entrepreneurs’ sentiment, many small firms continue to face challenges.

“The subpar optimism we’ve been seeing speaks volumes about the current uncertain business environment,” says Simon Gaudreault, chief economist and vice-president of research at CFIB. “Business owners have hardly been positive this year, and it’s not surprising given the trade and economic uncertainty, declining demand and rising operational costs.”

Average price plans and wage plans stand at 2.7 and 2.2 per cent, respectively. The weakness in the labour market continues, with 12 per cent of firms looking to hire in the next few months and 18 per cent considering layoffs.

“Based on our data, it does not look like the labour market will strengthen anytime soon,” says CFIB director of economics Andreea Bourgeois. “The share of businesses with hiring plans remains below its usual seasonal pattern, while more and more firms have stated layoff plans in recent moments, significantly exceeding seasonal patterns.”

Tax and regulatory costs remain top of mind for 67 per cent of small firms, followed by insurance costs (66 per cent). More businesses reported facing difficulties with wage costs (66 per cent in September, compared to 59 per cent in August). Weak demand also persists for more than half (55 per cent) of businesses.

In the wake of post-labour disruptions, 20 per cent of businesses reported challenges distributing their products.

The share of businesses struggling with capital equipment and technology costs has reached a record high of 36 per cent.

“With the pace of tariff announcements slowing down a bit and the discussion shifting to how Canada can durably adjust to a new trade and policy environment, we may be entering a new phase on the economic calendar,” says Gaudreault. “Meanwhile, business owners report that there are still many fiscal, regulatory and labour challenges that prevent them to contribute to the economic recovery. Certainty, stability and confidence remain in short supply and sending the right policy signals this fall could help turn the tide.”