Canadian small business confidence little changed in November

Confidence among small businesses was little changed in November, with the CFIB Business Barometer Index edging down 0.2 points to 58.7.  This follows a sizable jump in October, but still indicates that sentiment is lower than the 63.5 reading seen at the start of the year.

Confidence was up sharply in the natural resources sector (+7.5), which is somewhat surprising given the hit commodity prices took during the month.  However, at 38.9, sentiment remains over 20 points below year ago levels.  The hospitality sector also recorded a sizable improvement (+7.0), while the construction sector became much more pessimistic (-9.2).

Sentiment was mixed among regions, with small businesses in Manitoba (+7.4 to 68) now the most optimistic in the country.  Alberta also inched up (+1.2), but remains, by far, the most pessimistic province.  Saskatchewan, Newfoundland and Labrador and Quebec were the other provinces where small businesses lost confidence in November.

Encouragingly, businesses cited lack of demand as less of an issue in November, while concerns over a shortage of skilled labour increased.

Although it has bounced back from September's low, sentiment among small businesses nevertheless remains below year-ago levels.  This is unsurprising given the volatility in financial markets and renewed weakness in commodity markets.

"Macroeconomic conditions have been improving, with the Canadian economy bouncing back strongly in the third quarter after a weak start to the year.  And, the economy is expected to advance at a decent clip in Q4 as well.  This, combined with ongoing strength in the U.S. economy - should help to improve confidence of small businesses going forward - particularly those in industries tied to the export sector", notes TD economics.