Small business optimism in Canada was at an all-time high ahead of U.S. President-elect Donald Trump’s announcement of tariff plans and the Canada Post strike, according to the latest data from the Canadian Federation of Independent Business (CFIB).
The CFIB’s monthly Business Barometer recorded a pronounced four-point improvement in its long-term index in November, bringing it to its highest level in more than two years and almost in line with the historical average.
The November survey, however, interviewed CFIB members from November 5 to 13 and therefore needs to be put into perspective, said Andreea Bourgeois, CFIB economic director. Yahoo Finance Canada in an interview. Trump has since declared he would impose 25% tariffs on imports from Canada and Mexico, and 55,000 Canada Post employees have walked off their jobs, closing a key channel for companies to ship goods.
“It’s very strange to now publish a report saying that small businesses are very confident,” Bourgeois said. “When in fact, the proper term is to say they were very confident in early November, right?”
Bourgeois says the next survey may trend downward, but it’s not likely to show a precipitous drop in confidence — for a few reasons. About two-thirds of Canadian small businesses do not do business internationally, she notes, and so may be better protected against tariff impacts, at least in the short term. Furthermore, overall, small business owners’ feelings may not change until they start to see a material difference in their business’s performance.
“When interest rates started to rise, we captured that in the data and immediately the sentiment was still very good,” she said. A few months later, as the impacts of higher rates on loans became more evident, the outlook began to turn sour, notes Bourgeois. “So December will capture some companies that will see the effect immediately, but not all.”
The CFIB report shows that Canadian businesspeople’s short-term optimism has been more volatile heading into 2024, with the three-month outlook following a much more uneven trajectory than the 12-month outlook. Near-term sentiment, at 51.4, is several points below the 12-month outlook index of 59.7, which Bourgeois says is human nature.
“The way I usually measure uncertainty, although not officially as an indicator, is to look at the difference between short-term optimism and long-term optimism,” she said. “Over the last six months, we’ve seen moves in pretty much the same direction and the levels were much closer to each other, so I think that’s a good thing.”
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