Business optimism remains low and more small-business owners are struggling with costs, finds the Canadian Federation of Independent Business (CFIB).
The federation’s latest business confidence survey, conducted earlier this month among 531 small-business owners, indicated that concerns about costs are above historical averages.
Specifically, this includes the proportion of businesses struggling with energy (69%), wage (63%), insurance (59%) and product input (45%) costs.
More than a third (38%) of businesses cited borrowing costs as a challenge — double the share from a year ago.
“[A] large part of the small-business sector is currently under great financial pressure due to subpar revenues, accumulated pandemic debt and a rapid and significant rise in interest rates,” Simon Gaudreault, CFIB chief economist and vice-president of research, said in a release.
As businesses face pressure from interest rates, so too do their customers.
“The consumer is also likely to be put under increased financial stress over 2023, which will weigh on both consumer spending and growth, ultimately affecting business[es]’ bottom lines,” said Marc Ercolao, TD economist, in a report on Thursday about the CFIB survey results.
The survey found that business optimism increased by a half point in February to reach 51.7 on CFIB’s 12-month small business confidence index. A reading above 50 indicates that more business owners feel confident than negative about business performance in the coming months.
While the February result represented a slight increase for the third straight month, business confidence remains at the lowest levels recorded since 2009, outside of recessions, CFIB said.
“The confidence levels didn’t get worse this month but didn’t improve significantly either, suggesting a slow recovery and uncertainty around the economy,” Gaudreault said in a release. “Many businesses continue to feel the burden of years of subpar business conditions, which are now compounded by all sorts of rising costs.”
In a separate CIFB survey this month, nearly six in 10 business-owner respondents said their expenditures were above normal, and 58% still had pandemic-related debt.