Canadian small business sentiment index falls in July

Canada’s small business sentiment drops in the month of July. The CFIB business barometer index fell 5.4 points to 56.8 in July from June’s 62.2. The fall put the headline index below its year ago level. Region wise, business sentiment fell the most in Ontario, with smaller falls seen in New Brunswick, Quebec, British Columbia and Prince Edward Island. Sentiment also fell a bit in Alberta, but rebounded in other Prairie provinces. Businesses were slightly more optimistic in Newfoundland and Labrador and Nova Scotia.

Sector wise, sentiment fell throughout most industries, with steepest falls in agriculture and transportation, both sectors with larger international trade exposure. Retail and wholesale trade also saw notable declines. Confidence was also lower in manufacturing but stayed at a comparatively high level overall. The only industries were sentiment rose a bit were professional & business, health & education and hospitality services.

Plans for hiring and capital expenditure have been scaled back. Only 17 percent of businesses were expecting to add full-time staff, and 48 percent recorded that were not planning capital expenditures in the next three to four months. However, planned price rises rose 20 basis points, the rate of planned wage rises dropped by 10 basis points.

Trade concerns were apparent in regional data, with business sentiment in export – and manufacturing – oriented Ontario declining the most. Industrial details tells a similar story, with declines in sentiment in agriculture, manufacturing and trade-related industries. Businesses also tend to scale down their expansion plans in uncertain times, which is clear in the decline in capital expenditure and hiring intentions.

“While data tends to be volatile on a monthly basis, concerns about trade will likely continue to weigh on business sentiment in the months ahead, particularly if the U.S. administration decides to go ahead with auto tariffs”, stated TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bullish at 128.07, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 130.982. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex