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Data points: Small business confidence rises but remains subdued on outlook

Only 33 per cent of B.C. SMEs considered themselves to be in good state of business health, according to the latest Business Barometer survey from the Canadian Federation of Independent Business
B.C. small business confidence edges higher, but only a third consider themselves to be in good state of business health

Confidence amongst B.C. small and medium-sized enterprises (SMEs) edged higher again in March, according to the Business Barometer survey released last week by the Canadian Federation of Independent Business.

The long-term index rose to 53.8 points, above the index’s neutral level of 50 points, for the first time since August 2022. It was the strongest gain amongst all provinces – an increase from the 48.9 points recorded in February – though confidence remained subdued.

The short-term three-month index also increased to 51.9 points from 44.6 points month to month. The latest results are evidence of mild improvement in expectations from small business owners in the province. Although the short-term expectations of B.C. SMEs are positive, index values still lag national results, likely due to the higher debt load of households and businesses alike, and the challenges of a tight labour market.

More small business owners plan to bring in additional full-time staff, while only 33 per cent of B.C. SMEs considered themselves to be in good state of business health. According to survey responses, the shortage of skilled labour was the most pressing issue limiting sales and production growth. Insufficient domestic demand and shortages of unskilled and semi-skilled labour are additional factors preventing businesses from producing at their optimum potential. Wages, taxes and regulatory costs, and energy costs are some of the major cost constraints affecting business performance.

B.C. employers added to payrolls in January following a modest gain that was revised down in December. From Statistics Canada’s latest Survey of Employers, Payroll and Hours (SEPH), seasonally adjusted growth was 0.5 per cent (11,915 people) month to month in January – a third consecutive monthly gain that pushed total job count to 2.52 million positions. The estimates from the Labour Force Survey (LFS) reported a gain in B.C. employment of 7,700 people (up 0.3 per cent) during the same month. Both SEPH and LFS readings fell short of a more robust national performance. In B.C., the unadjusted job vacancy rate came in at 4.7 per cent, representing 120,625 unfilled positions.

With the latest gain, seasonally adjusted payroll counts were 6.6 per cent higher than February 2020, while employment growth reported by LFS was 4.9 per cent over the same period. Various factors can create divergence between the surveys, including the timing of job losses, as SEPH reflects payouts of salaries and-or benefits in a given month and not  whether an individual worked, and excludes farm work and self-employed workers.

January’s job gain was largely concentrated in service-producing industries. The trade sector (up 5,582 people), together with accommodation and food services sector (up 3,326 people), contributed most to the monthly employment gain and offset losses seen in sectors such as information and cultural industries (down 2,607 people). Employment in goods-producing industries was mostly flat.

Average weekly earnings rose 2.5 per cent to $1,182.48, and year-over-year growth adjusted to be 2.4 per cent. That said, the fixed hourly earnings index in B.C., which is controlled for industry, fell two per cent from the previous month. In comparison, the LFS average hourly wage rose 4.5 per cent year over year in January, but slowed from a five-per-cent growth in the previous month. 

Bryan Yu is chief economist at Central 1.