Canadian small business sentiment eases in March, likely to remain weak for some time

Canada’s small business sentiment eased in the month of March. The CFIB Business Barometer dropped 3.1 points to 55.9, the second lowest reading since March 2016.

Region wise, Ontario recorded the biggest fall of 4.6 points to 59.5. Meanwhile, New Brunswick recorded the largest rise, with the index rising 2.4 points to 56.6. Sentiment in the three resource-heavy provinces continues to be the lowest, with Saskatchewan dropping, and Alberta and Newfoundland & Labrador edging up slightly. On the other hand, Quebec and Nova Scotia remains the highest at 65.3 and 66.8, respectively.

Sector wise, the performance came in mixed, with the index dropping in 6 sectors out of 13. Natural resources recorded a drop of 5.8. This sector continues to show the lowest levels of sentiment amongst the sectors. Falls were also recorded in construction, transportation and information, arts and recreation. Wholesale trade recorded a rise, with the index rising 4.2 points to 61. Sentiment also rose modestly in professional and enterprise services, finance, insurance, and real estate and in health and education services.

Shortages of skilled labor held the top spot as the most cited factor limiting companies’ abilities to increase sales and production; however, dropped relative to previous months, noted TD Economics in a research report. Hiring plans dropped, with 16.6 percent of respondents expecting rises in the next three to four months.

Small business sentiment continues to disappoint. The weak performance is in line with an easing economic and downwardly revised growth forecasts, said TD Economics. The resource-heavy provinces and natural sectors continue to be a drag on the performance of the index. With Alberta’s curtailment plan underpinning prices in the near term, some of this softness should be reversed.

“That said, confidence in the sector and the province are likely to remain weak for some time given structural issues related to market access, uncertainty related to global oil prices, and weaknesses in the outlook for some other commodities that will impact the Prairies more broadly”, added TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 17.4164 while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 124.797 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex