B.C. business confidence dips in May

Confidence at B.C.’s small and medium-sized businesses retreated during May’s second half.

The Canadian Federation of Independent Business’ (CFIB)latest business barometer came in at 52.7 points, down four points from the first half of the month. The index hit a historic low of 28.8 points during the second half of March. An index level above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance.

While generally stabilizing, many businesses are understandably pessimistic.

While government supports have helped, losses continue to accrue to business owners.

B.C.’s restart plan, which has already entered Phase 2, means more businesses, particularly restaurants and retail, are in a recovery but will continue to operate well below capacity.

The CFIB’s latest reading shows that 43% of businesses deem business health as bad, with only 17% noting good conditions. On the employment front, 36% of survey respondents plan full-time staffing cuts, which is down from nearly 70% in April.

Restaurants have clearly been among the hardest-hit sectors during the COVID-19 pandemic. Sales for B.C. food services and drinking places plunged 37.6% in March to $655 million, which was slightly deeper than the national decline of 36.6%.

Full-service restaurants and drinking establishments were hardest hit. Compared to an overall decline of 38% year-over-year, both segments fell 51.6%. In contrast, sales at limited service (fast food) restaurants declined 24%. While some full-service restaurants pivoted to emphasize takeout during the period and into April, this provided only some offset.

April data will undoubtedly be lower with an accelerated decline due to the full effects of COVID-19 measures. Open
Table data shows dine-in activity fell sharply from the second week of March onwards, with 100% year-over-year declines by mid-March. This persisted in April and through mid-May.

Activity will remain weak despite the sector restart. Capacity restrictions are in place to promote physical distancing, although some municipalities are also shifting policies to allow increased patio space to boost sales. July and August are peak sales months, reflecting tourism and wedding season. COVID-19 attendance restrictions will severely stunt these activities. •

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