Business confidence among B.C. small and medium-sized enterprises (SMEs) edged higher in August, according to the Canadian Federation of Independent Business.
Its Business Barometer Index, which captures expectations on a 12-month forward basis, rose 1.7 points from July in B.C. to 58.2 points, suggesting on balance slightly optimistic firms. While heading in the right direction, confidence remains relatively low. Historically, a level near 65 points aligns with a normal growth economy. The Canadian index was 59.2 points. Additionally, the index may be inflated currently, as marginal firms that already exited during the pandemic may not have responded to the survey, while firms are also reassessing what a positive outlook means in the pandemic.
For harder-hit sectors, the federal wage subsidy program, emergency loans program and commercial rent relief program are providing unprecedented support for businesses amid the pandemic.
The survey also highlighted other positive trends. Capacity utilization is rising, reaching 68% from early April estimate of 39%. Hiring expectations remain weak but are stabilizing. Full-time hiring intentions slipped to 12%, but the proportion of those looking to cut has stabilized near 28%.
By now it is well established that the labour market recovery is underway. Labour Force Survey (LFS) estimates have shown three months of employment gains through July, with more than half of the peak pandemic losses recovered. That said, levels remain down 6.5% from February.
The latest payroll employment data through June largely provides additional context for the recovery phase, but little new information.
Payroll employment estimates from the Survey of Employment, Payrolls and Hours (SEPH), which is based on Canada Revenue Agency administrative data and excludes self-employed individuals and farm workers, jumped 5.1% in June to just under two million following a 2.7% decline the prior month. Levels returned to only 85% of February levels. Year-over-year employment was 14% lower than a year ago. SEPH employment has underperformed the LFS, which may reflect a number of factors. Multiple-job holders (such as hospitality and retail employees) may be working, but at fewer establishments as businesses cut back. Survey methodology differences may also be a factor in the deviation.
On an industry basis, 14 of 20 industries added employees in June. Consistent with LFS patterns, the largest gains revealed by SEPH were in those sectors with the largest pandemic-driven losses. Employment in accommodations/foodservices increased 32.6%, arts/entertainment/recreation rose 11.5%, and other private services increased 16%. Retail trade employment rose 8.1%. Combined, these sectors contributed 65% of the net gain.
Gains in job tenure in June were predominantly for employees paid hourly, where employment rose 9.6%, while salaried employment was unchanged.
Bryan Yu is deputy chief economist at Central 1 Credit Union.
