Canadian small business sentiment remains almost unchanged in November

Canada’s small business sentiment remained almost the same in November. The CFIB Business Barometer rose 0.7 points to 61.2 in the month from October’s print of 60.5, leaving the index still below its pre-2015 averages.

Region wise, rises were comparatively concentrated, with the index rising in only 3 out of the 10 provinces. Alberta saw a modest rise, but continued to be amongst the lowest three provinces in terms of small business sentiment, together with Saskatchewan and Newfoundland & Labrador. Gains were also recorded in British Columbia and New Brunswick, which rose to second place to replace Quebec.

Sector wise, performance came in mixed, with 6 sectors out of 13 seeing rises. The most marked gains were recorded in personal services and agriculture. Retail, health and educational services, and natural resources saw the most considerable falls.

Shortages of skilled labor, while falling modestly, still maintained the top spot as the most cited factor restricting companies’ abilities to increase sales and production. Hiring plans rose, with 18.1 percent of respondents citing expected rises in the next three to four months, a level closer to the yearly average and more encouraging than last month’s 15.7 percent. The expected percentage changes in prices and wages both continued to be the same at 2.2 percent and 2 percent, respectively.

The index continues to linger within a very narrow range for most of the year. The continuous softness in the three commodity-heavy provinces might be factor adding to the index not returning to its pre-2015 levels. However, the release is still far from painting a negative picture of business sentiment, noted TD Economics in a research report.

Capacity constraints continue to be a significant theme, with shortages of skilled labor consistently cited as a factor limiting firms’ ability to expand.

“Nevertheless, current weakness in commodity prices, especially oil, cast doubt on the ability of the index to reach the 65-70 range cited by CFIB as consistent with an economy operating at its potential”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bearish at -73.7884, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 24.4439. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex