Canadian small business sentiment continues to deteriorate, CFIB business barometer falls in April

Canada’s small businesses confidence continues to worsen. The CFIB business barometer fell 4.1 points to 56.6 in April. This marked the third straight monthly fall and the lowest headline print since early 2016. The fall was widespread region wise, with falls ranging between 0.2 points in Ontario and 7.4 points in Saskatchewan. Business owners in the latter, along with those in Alberta and Newfoundland and Labrador were the least positive nationwide.

In the meantime, Nova Scotia and Quebec continued to be at the top of the leaderboard, in spite of sizable falls. Sector wise, only agriculture and transportation rebounded on the month, with readings in all others falling between 0.2 and 7.7 points. Wholesale trade, natural resources and transportation led the way, with sentiment ranking lowest in agriculture, hospitality and retail.

Owners describing the status of their business as good or satisfactory was slightly changed, but those expecting their company to record a ‘weaker’ performance in the next 12 months rose from around 18 percent to 23 percent. The share of owners planning to make capital expenditures also eased off around 2 points to 55.2 percent.

Full-time staffing plans continued to rebound but stayed slightly weaker compared to the past few years. Average wage plans continued to weaken, falling to 2.2 percent from 2.4 percent in the prior month, while average price plans rose slightly to 2.2 percent.

With current conditions little changed, the fall in sentiment seems to be greatly related to worries about future performance – an element that is likely being a drag on capital expenditure plans. A tight labor market continues to be a constraint. However, with planned wage rises easing gradually and businesses passing on some of the costs down the supply chain through price rises, the initial shock from last year’s minimum wage legislation in Ontario should continue to dissolve, noted TD Economics.

“As we move away from that shock, confidence in Ontario should grind higher, helping uplift the national metric. The latter will also be supported by rising oil prices which will help lift confidence among the oil-producing provinces – currently the least optimistic”, added TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bullish at 68.2995, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 135.316. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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