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B.C. small-business optimism holds out against pandemic

Small business sentiment in B.C. remained relatively upbeat in November compared to other provinces but COVID-19 remains a headwind.
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Small business sentiment in B.C. remained relatively upbeat in November compared to other provinces but COVID-19 remains a headwind.

The Canadian Federation of Independent Business’ (CFIB) latest Business Barometer, which is a 12-month forward-looking measure of sentiment, came in at 62 points in B.C. from 60.3 points in October. B.C. sentiment has far outpaced the national reading of 55.7 points. A value above 50 means on that on net, respondents are positive about the year ahead, although a normal growth environment in B.C. is generally aligned with a value near 65 points.

While solid, sentiment levels are inflated as firms have likely lowered expectations about the future given the pandemic, and businesses that failed during the pandemic are no longer being surveyed. Short-term sentiment remained flat and low at 38.5 points, which is not surprising given uncertainty and likely disruption to the holiday season, which is a driver of revenue for many businesses.

National figures at the industry level show that sentiment was lowest in transportation (50.7), hospitality (48.6) and other services (52.6), which is unsurprising given decimation of tourism and physical distancing requirements.

Rising COVID-19 cases have added to angst for businesses across Canada as consumer confidence takes a hit and businesses fear more restrictive measures. B.C. authorities have restricted some social and business activities, but renewed restrictions are mild compared to those observed in Manitoba, and Ontario. Short-term hiring intentions are also weak with only 16% looking to add workers, while 22% plan to reduce staffing. This likely reflects differences among sectors. Sentiment and growth into 2021 will reflect virus spread. If levels continue to rise sharply, more restrictive measures are likely, hampering confidence.

The number of operating businesses continued to rise in August as the recovery phase reopened temporarily closed doors. Total active businesses in B.C. (with at least one paid employee) rose to 121,165 in August. This was up 1.2% or 1,387 businesses from July. While the number of opening businesses declined 11% from July to 6,663 businesses, this still outpaced the number of closures (5,281 businesses). â€˘

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