Supply-chain issues, restrictions and labour shortages contribute to dip in small business confidence: CFIB

Small business confidence took a major dive in January amid concerns about renewed pandemic restrictions and ongoing labour shortages and supply-chain challenges, according to the Canadian Federation of Independent Business’s Business Barometer.

The 12-month index fell to 54.3, while the three-month index reached 36.9, both consistent with the preliminary results CFIB released mid-month.

“There has been no improvement in small business outlook since the start of the month,” said Simon Gaudreault, vice-president of national research at CFIB. “The retail, hospitality and personal services sectors are particularly uncertain about the future.”

Businesses in the retail sector are the least optimistic over the next three months at 30.4 index points, a nine point drop since December. The short-term outlook in the hospitality (32.0) sector is also low.

Full-time staffing plans are still in the negative, with 23 per cent of businesses predicting layoffs in the next three months, and only 16 per cent planning to hire. Other indicators of business health also maintained their low readings from the beginning of the month.

The shares of businesses reporting shortages of input products (29 per cent) and distribution constraints (23 per cent) as a major factor limiting their growth remain elevated. In addition, unsold inventories contracted to 58 per cent this month compared to 68 per cent in December.

“Small businesses have been experiencing supply-chain challenges, from a shortage of products to increasing input costs, since the middle of 2021, but the issue is now gaining momentum,” added Andreea Bourgeois, director of economics at CFIB. “This only adds to the uncertainty many small businesses are facing.”