Short-term confidence has been improving in all business sectors, found the latest Canadian Federation of Independent Business (CFIB) Business Barometer, released April 28.

Businesses in the hospitality sector saw the biggest rise in short-term optimism, up by 16 points, says the CFIB noting that labour shortages and rising costs still continue to hold businesses back from recovery. 

The Business Barometer’s three-month optimism index sits at 60.8, an increase of 0.7 points from March. The 12-month index dropped by 0.4 points, to 64.9. 

"With the approaching seasonal peak activity and loosening of travel restrictions, small businesses in some sectors, especially hospitality, are feeling more confident. Almost all business health indicators have also seen improvement over last month's results," said Simon Gaudreault, Vice President of National Research at CFIB. "Despite the improvements in business sentiment, many small businesses are still facing significant challenges such as inflationary pressures, high fuel and energy costs, and shortages of labour." 

In total, 38% of businesses said they were in a good shape, while 17% reported being in poor shape, a small improvement over March's numbers, says the CFIB. Hiring intentions are gradually trending upward with 28% of businesses planning to add full-time staff, while 11% saying they will cut back. 

Pricing and wage plans continued to climb, with businesses expecting to increase prices over the next 12 months by an unprecedented 4.9% on average, while wage increase plans have reached 3.3%, says the CFIB. 

“Additionally, one half of small business owners report that skilled labour shortages continue to pose a challenge for their return to normal sales, a third say that unskilled labour shortages are holding them back and a third report supply chain disruptions,” says the CFIB. 

Fuel and energy costs (73%), wage costs (59%), and insurance costs (54%) were the top cost constraints for small businesses in April. 

"As small businesses continue to deal with high levels of debt, and widespread shortage of products and labour, these challenges keep stalling small businesses' recovery and their return to pre-pandemic levels of sales," said Andreea Bourgeois, Director of Economics at CFIB.