B.C. small-business confidence slid further in November, continuing a decline that began in September.
According to the latest reading, the 12-month outlook for small and medium-sized enterprises (SMEs) fell an additional 1.1 points to 63.3 in November and the shorter-term three-month outlook fell 2.8 points to 46.3. Measured on a scale between zero and 100, an index above 50 means business owners expecting their performance to be stronger in the next year outnumber those expecting weaker performance.
Given increased uncertainty heading into the winter months, the short-term outlook has baked in greater risk. Factors mentioned last month continue to cloud the outlook such as increased inflation, supply chain issues, the expectation of increased interest rates by mid-2022 and skilled labour shortages. This will likely be amplified due to the Omicron variant.
From a year-ago, short-term confidence remains 7.8 points higher and long-term confidence remains 1.2 points higher.
According to the latest figures among the SMEs surveyed, 15% are expecting to decrease full-time hiring over the next three months (unchanged from October) and 20% of SMEs feel the general state of business health is bad (up from 19% in October). Despite the increased uncertainty, B.C. SMEs continued to remain resilient and average capacity utilization moved up to 77%. Moreover, 26% of B.C. SMEs surveyed are back up at full capacity utilization, unchanged from October.
The recent natural disasters in British Columbia caused by flooding has added an extra layer of uncertainty and risk for small businesses.
The number of international arrivals to Canada continued to rise in September but remained well below pre-pandemic levels. The number of non-resident travellers entering through B.C. reached 118,472 persons, over five times greater than the same month last year, yet only 16.4% of the number from September 2019. The inflow of U.S. travellers since the reopening of Canadian border to fully vaccinated U.S. residents continued to lead growth. There were 97,506 American travellers entering B.C. in September, a fivefold increase from last year, but a small portion (18.3%) of the September 2019 level.
Canada began allowing entry to fully vaccinated foreign nationals for discretionary travel on September 7, 2021, contributing to relatively stronger gains from the U.S. •
Bryan Yu is chief economist at Central 1 Credit Union.
