Small Business Sentiment Inches Up in July

Small business confidence is trending in the right direction but at a snail’s pace.

This is according to findings from the Canadian Federation of Independent Business (CFIB).

The long-term small business confidence index has reached 50.9 points in July, just slightly above the break-even point of 50. This indicator has not hit its historical average since June 2022.

“The economy is stabilizing in some ways and the direction we’re heading is more encouraging,” says Simon Gaudreault, CFIB’s chief economist and vice-president of research. “Although there’s a lot of uncertainty caused by the U.S. administration, many announcements have not materialized in effective tariffs yet and it seems many business owners have started adjusting to the new trade reality, which might explain why they’ve regained some optimism.”

Inflation pressures are easing, with small businesses looking to increase prices and wages by an average of 2.7 per cent and 2.1 per cent, respectively. More than two-thirds of small companies cite struggling with tax and regulatory costs, while weak demand remains the top barriers to growth for more than half of businesses.

While hiring intentions during the summer season are historically strong, more businesses were looking to lay off staff (16 per cent in July versus 13 per cent in June). Only 12 per cent of companies were planning to hire compared to 15 per cent last month.

“Business owners tell us they’re dealing with trade and economic uncertainty, increased costs, and difficulty keeping up with taxes and regulations,” says CFIB director of economics Andreea Bourgeois. “Having long-term clarity would mean a great deal to small businesses right now.”