Canadian small business confidence index rises in January

Canada’s small businesses enter 2018 on a strong footing. The CFIB Business Barometer extended the positive momentum seen in the December quarter of 2017. The sentiment index rose 3 points to 62.7 in January, improving by almost 6 points since September, but still a few points below the 66-point cyclical peak seen in May.

Province-wise, sentiment rebounded in eight out of ten provinces, falling only in Alberta and Prince Edward Island. Quebec, British Columbia and Nova Scotia led the gains in sentiment. Ontario also saw a slight improvement. In the meantime, business owners were least optimistic in Newfoundland and Labrador.

Gains were widespread on sector-wise. Out of thirteen sectors, eleven saw improvement. The financial sector, professional and business services and wholesale sectors lead the way. Construction, retail and natural resources sectors also rebounded between 5 and 7 points on the month, trailing closely behind.

Other underlying indicators were widely optimistic. The share of firms describing the status of their business as good or satisfactory rebounded, matching a 2015 peak, while the share of those expecting their firm to perform better also moved higher, rising to 48.1 percent.

The share of companies recording that wages are causing difficulties rose even higher to a record of 63 percent. This was seen in average wage plans that rose 0.5 points to 3.2 percent.

“As businesses adapt to the new regulation, the sentiment reading should grind somewhat higher through 2018 – in line with still-decent economic growth of about 2.4%. But with many risks still at play, bouts of volatility are to be expected”, stated TD Economics in a research report.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bullish 52.0093, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -109.907. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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