CashNews.co
Small business optimism in Canada was on an upswing ahead of the announcement of U.S. president-elect Donald Trump’s tariff plans and the Canada Post strike, according to the latest data from the Canadian Federation of Independent Business (CFIB).
The CFIB’s monthly Business Barometer saw a pronounced, four-point improvement on its long-term index in November, bringing it to its highest level in more than two years and almost even with the historical average.
The November survey, however, canvassed CFIB members from November 5 to 13, and therefore needs to be put into perspective, Andreea Bourgeois, CFIB’s economics director, told Yahoo Finance Canada in an interview. Since then, Trump declared he would impose 25 per cent tariffs on imports from Canada and Mexico, and 55,000 Canada Post workers walked off the job, shutting down a main channel for businesses to ship goods.
“It’s very odd to be coming out with a report now saying small businesses are very confident,” Bourgeois said. “When, in fact, the proper term is to say they were very confident at the beginning of November, right?”
Bourgeois says, the next survey may trend down but it isn’t likely to show an off-the-cliff drop in confidence — for a few reasons. Around two-thirds of Canadian small businesses don’t do business internationally, she notes, and so may be better insulated against tariff impacts, at least in the short term. Furthermore, on the whole, small business owners’ sentiments might not change until they start seeing a material difference in their business performance.
“When the interest rates started going up, we did capture that in the data, and right away, sentiment was still pretty good,” she said. A few months later, as the impacts of higher rates on loans became more apparent, the outlook began to grow more sour, Bourgeois notes. “So, December will capture some companies that will see the effect right away, but not everyone.”
The CFIB report shows Canadian business owners’ short-term optimism has been more volatile in 2024, with the three-month outlook following a much more jagged path than the 12-month view. Short-term confidence, at 51.4, is several points lower than the 12-month outlook index of 59.7, which Bourgeois says is human nature.
“The way I usually measure uncertainty, even though not officially as an indicator, is I look at the difference between the short-term optimism and the long-term optimism,” she said. “For the past six months, we have seen movements pretty much in the same direction, and the levels were much closer to one another, so I think that’s good.”