Two thirds of polled firms signal an economic downturn is underway
One of the biggest fears for Canadian investors – and the economy – is recession. But are we there yet?
According to a poll of 150 small businesses, Canada is already in recession or an economic downturn at least; two thirds of respondents said that with another 22% saying it’s likely coming within the next 12 months, and 9% say it’s unlikely in that timeframe. In any event, 74% are concerned about potential recession including 36% who are very concerned.
The Merchant Growth research found that three quarters of small businesses that took part are already taking steps to mitigate a downturn such as cutting spending (76%), delaying hiring (38%), reducing inventory (37%), and pausing expansion plans (35%).
That said, 56% of respondents believe their business is able to navigate a potential recession including 39% who are confident and 17% who said they are very confident.
Asked what help from the Canadian government would be most useful if there is a recession:
- 75% cited access to low-interest small business loans
- 55% cited permanent tax relief, like expanding the small business deduction limit and a refundable credit for supply chain diversification
- 39% cited wage subsidies or hiring incentives
- 36% cited rent or utility subsidies18% cited reduced regulatory burden or red tape
The June Business Barometer survey by the Canadian Federation of Independent Business (CFIB) found that long-term optimism index gained 7.1 points, reaching 47.3 in June. The 100-point scale means that this reading is below the ‘break even’ point.
“Early signs point to small businesses getting used to tariffs and finding alternatives, but many are not out of the woods just yet. While most indicators stayed the same or slightly improved, businesses are still feeling the impacts of the lingering inflation, tariffs, counter-tariffs and overall economic uncertainty,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research.
Tourism businesses are particularly concerned as their critical summer season approaches.
