Canada’s small business sentiment saw cautious rebound in June. The CFIB Business Barometer rose two points to 54.6 in the month. While this is a rebound from the late-March lows, the index still continues to be about 5 points below its pre-pandemic two-year average performance. Businesses which have re-opened are operating at just 58 percent of capacity, a 9-point improvement relative to May. This low level of activity drags on profitability.
Positivity rebounded in eight out of 10 provinces in June, with Newfoundland & Labrador, PEI, Manitoba and Saskatchewan seeing the largest gains. New Brunswick and Ontario were the only provinces where sentiment dropped on the month.
Most industries saw results close to the national average. Nevertheless, the natural resources, agriculture and arts and recreation sectors stood out as the most pessimistic. On the opposite end, the financial services and wholesale trade industries were the most positive, with their indices coming in at 60.6 and 61.2, respectively. Insufficient domestic demand continued to be the number one element weighing on the outlook, with 50.3 percent of respondents citing this factor as likely to restrain sales growth.
“Business spirits continued to improve in June, as more businesses were allowed to reopen. However, the gain in June was much more modest compared to sharp bounce-back in May, and there is still a long and uncertain road ahead. Social distancing rules and other restrictions continue to weigh heavily on business profitability”, said TD Economics in a research report.