Canada’s CFIB small business confidence index falls in January, moderate pace of hiring likely in future

Canada’s CFIB’s Business Barometer index dropped slightly in January following two months of rises. The index dropped 0.6 points to 60.1. The reading has stayed range-bound near the 60-point mark since April 2016. Region-wise, Quebec led the way with sentiment index coming in at 68.6 points. The confidence reading in most other provinces was near the 65-point mark. Meanwhile, Newfoundland and Labrador, Saskatchewan and Alberta continued to remain behind in spite of the latter two registering a rebound this month.

Sector wise, the readings came in mixed. In manufacturing and information, arts and recreation, confidence rose 9 points each. Sentiment in natural resources saw a slight change and remains in much better place as compared to just a few months ago. Meanwhile, agriculture, construction and retail recorded the lowest level of optimism.

The share of businesses recording that they are in a bad shape has contracted significantly and is at the lowest point in over a year. However, employment and investment pans in particular stay slightly weak as compared to prior years.

Progress has remained slow as sentiment readings have lingered around the 60-point mark for the last ten months. While this strengthens the notion that the works of the oil shock is in the rear-view, it also indicates towards an economy that is struggling to change to higher gear, noted TD Economics.

Other elements in the survey imply that a cautious mood continues among small business owners. Small and medium-sized firms employ vast majority of the private sector workforce, while weakness in their plans is in line with a moderate pace of hiring in the future. With Canada’s economy greatly dependent on its southern neighbour, developments stateside seem to have stolen certain limelight in recent months.

“All in all, an improved outlook on U.S. growth should help raise prospects for the Canadian economy this year, but trade protectionism – concerns for which are likely behind some of the weakness in investment plans – would work in the opposite direction”, stated TD Economics.

At 05:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 48.8755, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 30.1827. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex