Small enterprise confidence in Canada continues to say no, as firms face rising prices and labor shortages, based on new survey information from the Canadian Federation of Free Enterprise (CFIB).
The CFIB present in its newest enterprise barometer that extra companies are feeling much less optimistic concerning the vacation season. The 12-month optimism index fell to 50 factors, a degree not seen because the pandemic-induced financial slowdown in 2020. Exterior of the 2020 decline, November’s decline is the bottom degree recorded since 2009. The CFIB says the index degree is often near 65. It signifies that the economic system is rising at full capability.
“The scenario is worrying for a lot of small companies,” Simon Gaudreault, CFIB’s chief economist and vp of analysis, stated in an announcement.
“The excessive value of doing enterprise, lack of employees and fixed rate of interest hikes make it tough for them to know for positive the place their enterprise goes.”
The CFIB survey discovered that rising borrowing prices are inflicting difficulties for 35 p.c of enterprise homeowners, in comparison with 17 p.c final yr. The Financial institution of Canada is in probably the most aggressive tightening cycle in its historical past because it tries to fight rising inflation, issuing six consecutive fee hikes since March, bringing the benchmark fee down to three.75 p.c.
The survey additionally discovered that 71 p.c of companies stated the highest issue limiting enterprise progress was gas and vitality prices, adopted by a scarcity of expert (53 p.c) and “semi/unskilled” staff (38 p.c).
The outcomes come forward of the vacation season, a essential time for a lot of small companies, particularly within the retail business. Whereas the retail sector sometimes sees optimism ranges rise throughout the vacation season, the outlook for retail companies stays dire, falling to the third-lowest degree within the final 12 months.
An Equifax Canada survey launched final week discovered that 60 per cent of Canadians say they’ll spend much less on presents this vacation season as a consequence of inflation. Equifax Canada additionally discovered that one in 4 (25 per cent) small enterprise homeowners are feeling extra assured concerning the 2022 vacation season than 2021, down from final yr when 36 per cent felt extra assured.
“For a lot of, the final uptick they see from vacation gross sales doesn’t look promising this yr,” CFIB economics director Andrea Bourgeois stated in an announcement.
“With massive buying occasions – Black Friday, Small Enterprise Saturday and Cyber Monday – developing this weekend, it is one other reminder to help native companies.”
CFIB’s month-to-month Enterprise Barometer survey in November was correct 19 out of 20 instances, with a margin of error of +/- 3.7 p.c, based mostly on 719 on-line responses from enterprise group members.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Comply with her on Twitter @alicjawithaj.
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