With COVID-19 cases rising across the country, small business confidence understandably fell in October as health-related restrictions returned in Ontario and Quebec.
The national Business Barometer produced by the Canadian Federation of Independent Business plunged to 53.3 points from 59.2 points in September. A value above 50 means on net businesses expect better conditions over the next 12 months. The index is typically above 60 points in a more normal economy.
B.C. sentiment, however, remained relatively firm with a gain from 59.3 to 60.3 points, which is surprising given rising pandemic caseloads. A less restrictive approach by the government and rise in domestic tourism in recent months were likely supportive. However, short-term three-month sentiment in B.C. remained weak at 37.1 points as virus uncertainty persists and the expectation of a stall in economic activity weighs.
Twenty-six per cent of firms signalled further reductions of full-time staff. While this has declined since the onset of COVID, due to realized cuts and the recovery phase, it still exceeds the share looking to hire (14%). Small-business performance and confidence will ultimately depend on the evolution of the pandemic and suppression measures.
Consistent with economic recovery, active business counts in B.C. rose for a second straight month in July. Total active businesses, defined as those with one or more employees during a month, rose 1% from June to 119,364 businesses. Business closures retreated to a normal level of 6,299, down 18.4% from June and 2.8% from same-month 2019.
Closures were outpaced by openings. According to Statistics Canada, nearly 54% of businesses closed in March and April had reopened by July. However, business counts are still sharply below pre-pandemic levels by 8.3% (10,820 businesses), and down 9.1% year-over-year.
August payroll counts for B.C. from Statistics Canada’s Survey of Employment, Payrolls and Hours (SEPH) rose 1.6% (33,380 persons) from July to 2.11 million. That said, SEPH counts were still 10% lower than in February, compared with a 6% gap in the Labour Force Survey over the same period. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
