Small business plummeted in October, dropping to levels not seen since the early months of the pandemic, found the latest Canadian Federation of Independent Business (CFIB) Business Barometer, released Oct. 27.

The three-month index dropped 3 points to 46.4, while the 12-month index dropped to 51.4 index points.

"Small businesses are facing a lot of worries right now – many have not yet repaid the debt they accumulated during the pandemic, while also facing another interest rate hike from the Bank of Canada due to the unresolved inflation challenge. In fact, 34 per cent of owners now say borrowing costs are causing difficulties for their business, a significant increase compared to the 21 per cent recorded last January," stated Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. 

The CFIB’s survey found that overall, 38% of businesses say they are in good shape and 15% say they are in bad shape. “Average price increase plans saw a small uptick to 4.2%, a level still among the highest ever seen, while wage increase plans remained steady at 3.1%. Staffing plans are also muted, with only 18% planning to hire full-time staff in the next 3 months, and 16% planning to reduce staff,” says the CFIB. 

Ontario saw the lowest short-term outlook and the biggest drop in confidence. Saskatchewan, Newfoundland and Labrador, and Alberta saw the biggest gains. 

Retail businesses  

Despite the upcoming holiday shopping season, businesses in the retail sector posted the biggest short-term drop in optimism (-4.2 index points) and were the least optimistic of the sectors at 41.1, followed by agriculture at 42.5. Businesses in information and recreation (69.8) and personal services (55.8) were the most optimistic. 

"Typically, we would expect retail to see a boost this time of year, so it's concerning that the sector is showing such a negative outlook for the next three months," added Andreea Bourgeois, Director of Economics at CFIB. "It really speaks to the anxiety business owners are feeling about inflation and lower consumer spending intentions."