Inflation and record-high worries about fuel prices weigh on independent business owners, says CFIB
The most recent Canadian Federation of Independent Business (CFIB) Business Barometer shows that both long-term and short-term small business confidence decreased in June.
The 12-month outlook declined by nearly three points to 59.4, while the indicator of short-term optimism plummeted by almost five points to 54.4.
While average price plans haven't moved much (4.8% over 12 months), average wage increase plans for the following 12 months have climbed to a historic 3.7%.
Andreea Bourgeois, Director of Economics at CFIB, said, "Small businesses continue to feel the pressures of rising costs and shortages of labour and products. This leads many of them to feel uncertain about the future. As inflation bites, a large number of small businesses are finding it harder to return to normal operating conditions."
Nearly all the provinces saw a decline in short-term business confidence, but it was particularly severe in Ontario (-6 index points) and Quebec (-4.5 index points).
All provinces also exhibited a decrease in long-term optimism, except for Prince Edward Island, New Brunswick, and Saskatchewan.
Input product and labour shortages were major cost restraints for 50% and 30% of enterprises, respectively, while fuel and energy costs remained the main barrier restricting business growth for 77% of businesses. A third of business owners, up 7% from May, said that high borrowing costs were a problem for them in June.
"While our political leaders describe that 'business is booming', this is very much not the case for 54% of small businesses that have yet to return to normal levels of revenue," said CFIB president Dan Kelly, citing data from the Small Business Recovery Dashboard. "And even those who have seen sales return to normal are now dealing with massive increases in costs with 62% of small business owners facing pandemic-related debt at an average of $160,000".
Businesses in the information, arts, and recreation sector reported a significant decline in short-term confidence of 11 index points, while the health sector had a decline of 5 index points.
"Concern over fuel and energy costs have never been this high. Given the challenges small businesses are currently facing, CFIB is calling on the federal and all provincial governments to scrap or temporarily lower fuel excise taxes for the months ahead, pause planned hikes to carbon taxes and finally address the tax-on-tax anomaly with fuel sales taxes. Canada should be borrowing approaches from the United States, Ontario, Alberta and Newfoundland and Labrador by reducing fuel-related taxation," Kelly said.