B.C. business confidence remains subdued

Small-business confidence in B.C. remained tepid, according to the Canadian Federation of Independent Business’ (CFIB) Business Barometer reading for June.

The index in B.C. edged higher by 0.9 points from May to 53.6 points but was the fourth-lowest number among provinces. The index had dropped to a pandemic period low of 28.8 points in March before turning higher.

While the index was above the 50-point demarcation level, which means on net more businesses are positive than negative about future business conditions, businesses remained understandably cautious. A normal operating and growth environment is consistent with index values near 65 points.

Other data tracked by the CFIB suggests weak hiring and investment conditions will persist. Full-time hiring intentions, while improved from recent months, showed 33% of firms surveyed expect layoffs over the next three months and only 16% plan to hire new workers. This suggests weak demand is causing firms to shed some positions even as the economy opens up. Capacity utilization rates of firms rose 3.9 percentage points but remained low at about 55%.

B.C. payroll employment counts plunged in April, which is unsurprising given sharp contractions observed in the timelier Labour Force Survey (LFS). Payroll employment from the Survey of Employment, Payrolls and Hours (SEPH) showed a decline of 269,240 jobs or 12.1% from March as the effects of the pandemic slammed into the economy. Compared with February this marked a decline of 16.8% or nearly 400,000 positions

This two-month decline was deeper than the LFS estimate of 15.6%, which could reflect various factors. Agriculture has been less affected by pandemic job losses, while deeper employment losses in SEPH may reflect multi-job holders.

Among industries, all sectors outside public administration shed jobs during the month. Service industries represented the bulk of the losses with a 12.6% decline compared with a 8.8% decline in goods-producing industries. 

Retail trade employment fell 11.8% from March and 17% from February. Combined, these three sectors made up half of the near 400,000-person loss in payroll counts during the two months.

Average weekly earnings reached $1,106.25 in April, up 7.5% from March and 11.6% from the same month in 2019. •

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