Small businesses saw an increase in optimism and confidence in March, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer released March 31.
The 3-month index improved by 6 points to 60.2, the highest level since before the pandemic, says the CFIB. The 12-month optimism index rose by 2 points to 65.1.
Supply chain challenges
"Small businesses are starting to feel more optimistic as many restrictions are lifted across the country, signalling a new phase of this pandemic. However, other indicators of business health show that there are many concerns on the horizon, namely higher costs, supply chain challenges and labour shortages, which may hold back business recovery," said Simon Gaudreault, Vice President of National Research at CFIB.
The CFIB says 34 per cent of businesses reported being in good shape, while 22 per cent indicated being in poor shape. Price and wage plans continued their upward trend, with businesses predicting they would increase prices by an average of 4.7 per cent over the next year, while wage plans have increased to 3.1 per cent.
Major cost pressures
The CFIB underlines that despite the uptick in optimism, “businesses are still facing major cost pressures that may slow their recovery, growth and return to pre-pandemic sales levels.” Fuel and energy costs were among the major cost constraints for a majority of businesses (72%), a 7% jump in one month. Supply chain issues and labour shortages also continued to be challenges facing businesses.
"It's good to see small business owners express optimism for the future after the last two years of the pandemic," said Andreea Bourgeois, Director of Economics at CFIB. "However, that does not mean they are in a good position to absorb new costs. With the federal carbon tax set to increase April 1 and governments already planning to add various other new costs, businesses are still facing obstacles that hinder their success."