Small business confidence plunged 11.7 points in May to an index reading of 46.3, pushing the long-term optimism measure below the 50-point threshold, the CFIB reported, and Andreea Bourgeois said many firms are stuck in a grind of weak demand and high costs.
The drop was broad: every province and every sector recorded declines in the May survey, which drew 563 responses between May 5 and 12. Fuel costs were the single largest pressure, cited by about 72% of respondents, while 53% flagged weak consumer demand as a key constraint. Average wage plans held steady at 2.4%, but businesses said they planned to raise prices by an average of 3.1% in the coming months. Hiring intentions remained muted, with just 14% of small firms looking to add full-time staff.
The CFIB released the Monthly Business Barometer results on May 21. The findings come from a stratified random sample of the federation’s roughly 103,000 members, collected via a controlled-access web survey with a margin of error of +/- 4.1 percentage points 19 times in 20.
For owners in manitoba, the numbers replicate a national squeeze: declining confidence, rising input costs and weak sales expectations. The long-term optimism index — the barometer for performance over the next three to 12 months — has fallen beneath the 50 mark, which CFIB interprets as more owners expecting weaker performance than stronger.
That combination is the heart of the barometer’s worry. Bourgeois said many small firms are still trapped in a cycle where demand is lackluster, costs — and particularly fuel — remain elevated, and conditions show no sign of improving, a mix that discourages new orders and investment. She also warned that higher oil prices are adding upward pressure on inflation while tariffs and other challenges continue to weigh on growth, and noted that with a Bank of Canada interest rate decision only weeks away, the environment is precarious. She flagged that this is the second month price-increase plans have topped 3% and asked whether that could mark the start of a new upward trend.
The data contain some uncomfortable frictions. Firms plan only modest wage increases, unchanged at 2.4%, even as they expect to lift prices by about 3.1%, suggesting cost pressures are being passed to customers rather than absorbed into higher pay. At the same time, hiring intentions remain weak: only 14% of respondents expect to hire full-time in the next few months, a figure that undermines hopes for a quick demand-driven recovery.
Simon Gaudreault pointed to the policy choices available at home, saying governments cannot control global shocks but can ease the burden on small businesses through domestic measures. He urged steps such as lowering taxes, cutting red tape and removing internal trade barriers to help firms weather current challenges and to create conditions that pay off over the long term.
Absent such action, the clearest prospect from the barometer is a continued squeeze on small firms: weaker expectations, elevated cost pressures and a renewed willingness to raise prices. If that pattern holds, it risks prolonging the stall in orders and investment that Bourgeois described, while keeping hiring and wage growth subdued. The next Bank of Canada decision and any domestic policy moves will determine whether May’s fall in confidence proves a temporary wobble or the start of a longer downturn.
