Low commodity prices, market volatility continues to weigh on Canada’s small business confidence

Small business confidence in Canada deteriorated again in March after taking a break in February. The CFIB business barometer index dropped 2.4 points to 52.3 in March, the lowest since early 2009. For Q1 2016, the average confidence reached 53.8. The confidence index dropped throughout the nation. The sentiment figure moved lower in nine provinces in March.

New Brunswick and Manitoba led the drop, declining to 53.2 and 54.8 respectively. Meanwhile, index in Newfoundland and Labrador and Prince Edward Isla each dropped by 6.4 points to 47.1 and 59.1 respectively. Sentiments in Saskatchewan and Alberta also dropped and have an index reading below 50, first time since 2009 crisis. The only province that witnessed a moderate rise in sentiment was British Columbia.

On basis of sectors, drop in confidence was seen in eight out of thirteen industries. Sentiment in natural resources fell 8.6 points to 33.7, while in construction it fell 6.3 points to 50. Meanwhile, sentiments in five industries rebounded, led by manufacturing where sentiment rise 6 points to 56.5.

The CFIB report released yesterday was a disappointment, emphasizing that a mixture of market volatility, low commodity prices and worries regarding global growth continue to weigh very much on Canada’s business confidence, says TD Economics. The persistent low oil price continues to impact confidence in oil-producing regions even if oil prices rebounded from January.

Small business confidence is expected to take some time to post significant gains, according to TD Economics. Moreover, perceptions regarding certain outcomes from federal budget released recently might also weigh on confidence. Meanwhile, other measures show that the Canadian economy is expanding more than its potential in Q1 2016.