Small business confidence over the long term remained stable but low, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer released on Thursday.
The 12-month index gained 0.5 points, reaching 51.4 index points in January, it said.
Andreea Bourgeois
“Small business confidence seems to be better but there’s still a lot of uncertainty in the economy. For this time of year, the levels are still quite low,” said Andreea Bourgeois, Director of Economics at CFIB. “Many businesses will continue to struggle under pandemic debt and rising prices unless the government takes action.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region
The report said shortages of skilled labour, albeit cooling off, continue to be the top limitation for nearly half (46%) of small businesses. Wage costs are above the historical average, causing cost constraint for 60% of firms, while borrowing costs are causing difficulties for 37% of businesses, more than half over the historical average for this indicator, it said.
Among sectors, retail has posted the lowest optimism level over the long term (41.2) – this marks the seventh consecutive month of an index below 50, added the report.
A CFIB survey found that 94% of small businesses want the federal government to address rising prices as Parliament returns to session on Monday. Other priorities small businesses want to see addressed include reducing the overall tax burden (92%), ensuring labour policies are reasonable for employers (90%) and helping employers deal with labour shortages (77%), according to the survey.
Corinne Pohlmann
“We’re hearing from members who are concerned about their future and where the economy is headed as they continue to deal with pandemic debt, increasing taxes, inflation and labour shortage,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “These challenges are having a crippling effect on their revenues, ability to grow and mental wellbeing. Small businesses need some reprieve.
“Given all the challenges small businesses are facing, CFIB is calling on the government to help mitigate the impact of economic pressures on small firms. Give them some time and room to breathe and get back on their feet.”
CFIB has sent a letter to Members of Parliament ahead of their return to Parliament on Jan. 30, calling on the government to implement various fiscal relief measures to support small businesses, including introducing a targeted Employment Insurance (EI) premium credit for 2023. The credit would reduce premiums for eligible employers to the same amount their employees pay.
To help small businesses alleviate some of their financial pressure, CFIB recommends the federal government:
- Introduce a targeted Employment Insurance (EI) premium credit for 2023
- Increase the maximum threshold for the small business tax rate (e.g., to $600,000), and index it to inflation going forward
- Decrease the small business tax rate from 9% to 8%, at least for the next two years
- Work with the provinces to offset the costs of the 2023 increases in Canada Pension Plan premiums through a targeted credit for small businesses.
Ksenia Bushmeneva, Economist with TD Economics, said small businesses started the year on a slightly better footing.
“Evidently, many of last year’s gremlins, such as supply chain backlogs and labour shortages, are now retreating. Still, business sentiment remains subdued. Cost pressures are still acute, and some, such as the cost of borrowing or servicing existing debt have intensified. More businesses also expect weaker sales in the year ahead amid rising concerns about insufficient domestic demand. This is in line with our economic outlook, with growth and consumer spending both expected to slow this year, weighing on businesses’ profitability.”
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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