Business sentiment among small and medium-sized enterprises (SMEs) improved nationally in August, according to the Canadian Federation of Independent Business’s (CFIB) Business Barometer.
The long-term, 12-month index rose 1.3 points to 56.8, while the short-term, three-month index advanced 4.7 points to 51.8—both above the neutral benchmark of 50 points. The long-term index reached its highest level in two years, but is still five points shy of the historical average. The general state of business health reported by most SMEs was “satisfactory,” as factors such as insufficient domestic and foreign demand and labour shortages weighed on sales growth. Optimism about business conditions was strongest in the arts and recreation sector, while agriculture, retail and construction sectors displayed the lowest levels of business confidence.
Results were consistent with a recent Canadian Survey of Business Conditions, which found inflation, high interest rates, costs of inputs and worker recruitment to be the most challenging obstacles for businesses, especially in agriculture and retail. That said, these cost-related obstacles have been easing, leading to improving sentiment—a trend seen since the fourth quarter of 2023.
But B.C. is one of the few provinces to see falling long-term optimism. It’s index fell by 1.3 points to 55.6 in August. The three-month index also declined, down 2.2 points to 50.5. Although both indices are above the neutral benchmark, long-term optimism has declined for two consecutive months and is consistent with that seen in a weak economy.
Like the previous month, a third of B.C. SMEs considered themselves to be in a good state of business health and reported that full-time staffing plans remained relatively unchanged. Insufficient demand and shortages of skilled and unskilled labour were the top constraints to sales or production growth for businesses in the province. Limited working capital and physical space also limited sales growth.
In alignment with soft business sentiment, B.C. employers reported a net decline in payroll positions in June, following an increase in May.
According to the latest Survey of Employers, Payroll and Hours, June’s result saw a modest decrease of 2,925 positions (down 0.1 per cent) bringing total payrolls down to 2.56 million positions. Goods-producing industries added 996 positions, while services payrolls led the overall decline, with 4,556 fewer positions (down 0.2 per cent).
B.C.’s job vacancy rate edged down to 3.6 per cent in June, with 5,695 fewer vacancies reported, bringing total vacancies down to 89,475 positions. The job vacancy rate has remained low since the second half of 2023, reflecting limited supplies of new job openings due to economic uncertainties.
The province’s manufacturing sector managed to maintain the lowest level of payroll positions seen since the end of 2020. Broad declines in payroll numbers were seen among services-producing industries in June, except in educational services, which added 1,320 positions. A notable decrease was reported in accommodation and foodservices—2,060 fewer positions (down 0.9 per cent).
Bryan Yu is chief economist at Central 1.
