Small business confidence fell to a new historic low amid impacts of the COVID-19 (coronavirus) pandemic, according to the Canadian Federation of Independent Business (CFIB)’s latest Business Barometer, released on Wednesday.
After a 10-point drop earlier in the month, the national confidence level fell a further 19 index points to 30.8 from February’s level of 60.5. The index is measured on a scale of 0 to 100 based on owners’ perspectives on the health of their businesses for the year ahead. An index level nearer to 65 indicates that the economy is growing at its potential.
“March 2020 has turned out to be a month like no other in Canada’s economic history,” said Ted Mallett, CFIB’s vice-president and chief economist, in a news release. “Small business sentiment has never been this low in the Business Barometer’s 32-year history, including during the 2008 and 1990 recessions.”
The report said only one in five owners say their business is in a good state, compared to 38 per cent who say it is doing poorly. Hiring plans have ground to a halt, with just five per cent of business owners planning to add on full-time staff in the next three months and 50 per cent planning layoffs.
“Although these measures are necessary, they have a direct immediate impact on small businesses and their employees,” said Mallett. “We are urging governments to provide more relief for small businesses to make sure that we can restore optimism after the crisis is over.”
The CFIB said Quebec experienced the sharpest drop in optimism this month, falling 44.5 index points to 15.7. It is possibly due to the province taking quicker and more drastic measures than other provinces to halt the COVID-19 outbreak, it said. Alberta (26.2) and Newfoundland and Labrador (27.8) had the next lowest results, although they experienced the smallest drops in optimism. Saskatchewan (28.3) and British Columbia (28.8) both posted levels close to the national average after experiencing 16-point drops, while Ontario (37.0) and Manitoba (37.5) fared a bit better. Nova Scotia (44.0) and New Brunswick (44.6) both experienced large drops in confidence, but remained more upbeat than the rest of the country.
“From already low levels, Alberta’s small businesses lost confidence in March. The Business Barometer Index shaved a few points to drop to 26.2, close to levels seen in early 2015. All the other indicators are strongly negative—with layoff plans the strongest in the country (at 66 per cent),” said the CFIB.
Alberta’s small business confidence is a record low.
“These numbers clearly indicate small business owners are feeling the impacts COVID-19 is having on the economy,” said Annie Dormuth, CFIB’s Alberta Director of Provincial Affairs. “We continue to take hundreds of calls from small business owners who are facing temporary layoff and business closure decisions, seeing low revenues and have serious concerns about paying their rent or lease on April 1.”
Only five per cent of business owners say their business is in a good state, compared to 60 per cent who say their business is doing poorly. Hiring plans have ground to a halt in Alberta with only three per cent of business owners planning to hire full-time staff in the next three months, while 66 per cent are planning layoffs – the highest in Canada, said the CFIB.