CFIB Small Business Barometer (April 2022)

Ksenia Bushmeneva, Economist | 416-308-7392

Date Published: April 28, 2022

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Near-term small business confidence edges higher in April   

  • The CFIB Business Barometer, a measure of small business confidence over the next 12 months, was little changed in April, edging lower slightly to 64.9 from 65.2 in March.
  • The more immediate 3-month ahead outlook posted a small uptick, gaining 0.7 points on the month and rising to 60.8. Industries such as hospitality, personal services, and arts & recreation have seen outsized gains in near-term confidence thanks to easing public health restrictions.    
  • Looking beneath the headline, most subcomponents improved on the month. Eighty-three percent of respondents rated the current business situation in their company as good or satisfactory – an improvement from the month prior. Capacity utilization and hiring plans edged higher on the month, with more businesses planning to increase their payrolls in the next 3-4 months.
  • Despite some improvement in hiring intentions, labour shortages continue to persist, limiting how quickly businesses could increase payrolls and scale up production. Half of survey respondents reported shortages of skilled labour were limiting their ability to ramp up production, and 37% cited a shortage of semi-skilled/unskilled labour as an impediment. Both indicators are well-above their pre-pandemic levels.  
  • In addition to labour shortages, concerns over supply chain disruptions showed no signs of abating. About one third of businesses reported that difficulties in sourcing inputs and product distribution constraints was limiting their ability to increase sales or production.   
  • Facing rising costs, particularly for energy, businesses' plans to increase prices continued to trend higher. The average planned price increases over the next 12 months rose to 4.9%, up from 4.7%, previously. A tight labour market was also boosting wages, with wage increase plans rising to 3.2% up from 3.0% previously.         

Key Implications

  • Easing public health restrictions continued to support small business optimism in April, with the near-term confidence rising to the highest level since May 2019. Not surprisingly, businesses in the hard-hit hospitality sector reported one of the largest improvement in the near-term confidence, followed by businesses in arts & recreation and personal services. We expect that easing restrictions and consumer demand shifting increasingly away from goods and toward services will continue to aid recovery in these industries during spring and summer months. 
  • Businesses in the natural resource sector also felt upbeat as they benefit from high commodity prices, and had the highest near-term confidence among all sectors. But what's gain for businesses in resource sectors is pain for others. Rapidly rising input prices and snarled supply chains remain a challenge for many businesses leading them to raise prices. 
  • On the positive side, consumer spending as a whole is still expected to remain healthy over the next few months, supported by pent-up demand, elevated savings, and significant wealth gains accumulated during the pandemic. The anticipated rotation of consumer spending from goods toward services should also help to ease the pressure on supply chains.