Canadian small business sentiment rises in January

Canada’s small business sentiment rose in January. The CFIB Business Barometer index rose 2.5 points to 56.1. This only partially reversed December’s plunge and the index continues to be well below its long-term average.

Region-wise, the gain in sentiment was narrowly based, with the index rising in 4 out of 10 provinces. Sentiment was higher in Ontario, Nova Scotia and Quebec. It also rose in Saskatchewan, but remained relatively low. On the opposite end of the spectrum, a sharp fall in registered in Alberta for the second consecutive month, while sentiment also fell in Manitoba, Newfoundland and Labrador and B.C. Optimism dropped in PEI and New Brunswick, although it continued to be above the Canadian average in both provinces.

Industry wise, 6 sectors out of 13 saw gains, led by professional and business services and retail trade. On the contrary, large falls were seen in health and educational services and the natural resource sector.

Shortages of skilled labor, while falling on the month, still stayed the top factor cited as restricting the ability of companies to increase sales. In the meantime, net full-time hiring plans for the next three months rebounded, with more companies citing intentions to increase staffing. Additionally, the percentage of respondents citing their general business situation as “good” increased, whereas that of respondents citing their business situation as “bad” dropped.

Inflation readings were slightly muted in the report, as the anticipated percentage change in next year’s price plans moderated a bit to 2 percent from 2.2 percent, whereas that of wages fell to 1.6 percent from 1.7 percent.

Small business sentiment continues to be comparatively low in spite of edging higher in January. Sentiment dropped in Alberta despite sharply rising WCS prices. With oil production likely to stay weak in 2019, it might be sometime before sentiment rebounds significantly in the province, said TD Economics in a research report.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 20.537, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -135.948 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex