Canada’s small business optimism falls in June

Canada’s small business optimism fell back in June. The CFIB Business Barometer index dropped by just more than 5 points in June, erasing almost all the gains made in the four months prior. The level of index came in at 60.9; however, the level of index is higher than it was over the 2015-2016 period.

June’s decline stemmed greatly from a 10-point drop in Ontario, resulting from the recent announcement of changes to employment standards, including a considerable rise in the minimum wage, and changes to rules surrounding shift notification and vacation days. The hit to sentiment in June brought the province from one of the most optimistic to one of the most pessimistic, noted TD Economics in a research report.

The drop was quite broad based throughout industries; however, industry results also appeared to be hit by new policy measures in Ontario, with optimism in the retail sector taking the biggest hit. Sentiment in the business and professional services, hospitality, agriculture and manufacturing also registered huge declines in the month, while transportation and construction provided some offset.

It is evident that small businesses are worried about the effect of new labor market regulations in Ontario. This, along with a decelerating housing market, are expected to present headwinds for small businesses in the province going forward, stated TD Economics.

The recent decline in oil prices has yet to weigh on sentiment in oil-producing regions, hinting that the outlook for Canadian economic activity more widely in these provinces is improving. Still, small businesses in Saskatchewan, Alberta and Newfoundland and Labrador continue to be amongst the most pessimistic in the nation and further or persistent weakness in oil prices might result in the deterioration in confidence.

“While risks remain, the remarkable performance in the Canadian economy in recent quarters, and expectations for above-trend growth over the remainder of the year should bode well for nationwide confidence going forward”, added TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -53.8596, while the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 47.0028. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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