Small and medium-sized business confidence remained on the upswing in July as vaccine progress and reopening trends buoyed sentiment, according to the Canadian Federation of Independent Business (CFIB).
The group’s Business Barometer indicator showed a rise in B.C.’s 12-month outlook to an index reading of 69.5 points – up a point from June, while the three-month outlook rose to 55.8 points, marking a seventh straight increase and highest since June 2019. The index ranges from zero to 100 points, with a value above 50 suggesting on net that businesses expect improvements in the period ahead.
B.C. businesses are more optimistic than their provincial peers. Both the 12-month and three-month indicators were third-highest among provinces. This is not surprising. The economy has rebounded quicker amid relatively moderate social and economic restrictions, and employment has returned to pre-pandemic levels. Moreover, the province is advancing through Step 3 of the reopening plan, and operations are normalizing in many sectors. Further relaxation of measures could come as early as September 7, allowing for normal contact, large events and more spectator events. Domestic tourism is likely robust, offsetting what will be a slower recovery in international tourism that is contingent on entry restrictions and global state of the pandemic. Broadly, constructive trends will buoy the hardest-hit sectors in the economy.
Hiring plans are strengthening in line with confidence. Of businesses surveyed, 25% planned to increase full-time hiring over the next three months, and 14% looked to reduce levels. This suggests reopenings are driving increased demand for labour. That said, the small-business sector has yet to fully recover as only 80% of businesses were fully open, while 40% operated at normal or above staff and revenues.
Payroll counts rolled back modestly in May as third-wave restrictions led to increased layoffs. Non-farm payrolls in B.C. fell by 0.6% or 14,000 positions from April, according to Statistics Canada’s Survey of Employment, Payrolls and Hours. The 2.25 million positions were the lowest since February.
Directionally, May’s decline was consistent with a 1.5% employment drop in the April Labour Force Survey. •
Bryan Yu is chief economist at Central 1 Credit Union.
