Optimism rises from pandemic depths

National small and medium- sized business confidence may be improving, albeit slightly, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer.

The index, published twice monthly during the COVID-19 pandemic, rose to 46.4 points in the second half of April. While this still points to a pessimistic business outlook given it falls below 50 points, it is substantially improved from the 31 points recorded during the second half March and 37.7 points in the first half of April.

The flood of support from various levels of government, including the federal Canada Emergency Wage Subsidy, Canada Emergency Benefit Account, and announcement of the Canada Emergency Commercial Rent Assistance has provided more hope for the long-term viability of businesses. Signs that provincial governments are lifting some containment restrictions may also be helping.

Nearly all sectors outside resources, information/arts/recreation and finance/insurance/real estate experienced sharp increases in index values but remained below 50 points.

B.C.’s index reading was in line with the national reading at 46.0 points. Only Ontario (52.6 points) and Saskatchewan (50.8 points) broke the 50-point barrier. Within the detailed survey findings, about half of B.C. respondents suggested full-time staffing will be down in the next three-month period, with only 10% predicting an increase. Similarly, 50% of respondents said that business health was bad, with 14% responding it was good. Average capacity utilization in B.C., at 46.3 points, was above the national reading of 39.9 points.

Payroll employment and average weekly wages eased in February prior to the full force of COVID-19 hitting Canadian society and the economy. Various macroeconomic factors, including rail blockades and the outbreak of COVID-19 at its initial epicentre in China, had already contributed to a slowing in economic activity. Concerns over the virus may already have been percolating at the time.

National average weekly earnings fell 0.3% from January to $1,046, with year-over-year growth at a still-strong 3.7%. B.C. earnings declined 0.5% from January to $1,020, albeit with a robust year-over-year gain of 4.8%. The latter was strongest among provinces.

Despite monthly volatility, weekly earnings growth had been trending at a year-over-year pace above 3.5% since October. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.