April small business optimism drops

CFIB’s Business Barometer long-term index, which is based on 12-month forward expectations for business performance, had a sharp drop in April, reaching 47.5. The short-term optimism index, based on a three-month outlook, also lost  five points, and reached 47.0. Both indexes are at about the same levels as they were at the beginning of the year.

The drop in long-term confidence touched most provinces. Saskatchewan (-7.0) and Ontario (-6.7) have seen the most severe declines, and both settled just below 50 at 49.2 and 47.6 respectively. The two largest provinces, Ontario and Quebec, are sitting at historically low levels and below the 50-mark casting a glooming light on the Canadian economy overall.   

The sectoral monthly changes are more mixed. Some sectors have registered modest gains (such as professional services +2 points, manufacturing +1.9 points) while others have seen decreases (health and education -5.5, agriculture -3.9, and construction -2.4).    

The Barometer shows that for the first time since May 2022, the average price increase indicator gained abruptly (+0.5 points) and reached 3.2. This breaks the series of gradual decreases or minor gains and jumps above the upper limit of the inflation range of 3.0. 

Average wage increase plans for the next 12 months also increased from 2.5 in March to 2.9 currently.