Business confidence in Canada remains subdued in Canada despite bouncing back from its lows in the early stages of the trade war, according to the latest Canadian Federation of Independent Businesses (CFIB) Business Barometer report.

The long-term index saw a slight increase from August to September, reaching 50.2. A reading below 50 indicates more businesses anticipate weakening performance than strengthening in the period ahead (i.e. 12 months in the case of the long-term index).

The index has jumped from a record low in March when businesses were gripped by unprecedented trade uncertainty following U.S. tariff threats and announcements. However, the index remains below pre-trade war levels. The short-term outlook (3-month) has remained weak at 44.9, staying below 50 since last December.


Alberta mirrored this pattern, with its long-term outlook rising to 53.4 in September after a low of 25.2 in March. Regionally, New Brunswick had the highest index in May at 58.8, while British Columbia had the lowest at 45.3.

Optimism among small and medium-sized enterprises (SMEs) engaged in international trade remained low, in contrast to those operating solely in domestic markets, which fared somewhat better.

Businesses are primarily hampered by insufficient demand, cited by 55% of respondents, followed by a shortage of skilled labour at 42%. However, in a sign of a weak labour market overall, 18% of businesses are planning layoffs in the next 3-4 months—the highest since March. Conversely, only 12% of respondents intend to increase full-time employment within the same period.

Lingering tariff uncertainties are likely to keep business confidence subdued. However, ongoing reduction in borrowing costs and spending on major projects could provide a boost should they proceed.

Given the economic stress highlighted by these results and inflation remaining within the 1-3% control range, a further interest rate cut by the Bank of Canada seems likely before the end of the year, even if not at the upcoming October 29 announcement.

*The long-term optimism index is based on how businesses expect to be performing in 12 months while the short-term optimism index is based on how businesses expect to be performing in 3 months. Measured on a scale between 0 and 100, an index above 50 means owners expecting their business’s performance to be stronger outnumber those expecting weaker performance. An index level near 65 normally indicates that the economy is growing at its potential.

Answer to the previous trivia question: Daron Acemoglu, Simon Johnson and James A. Robinson won the Nobel Prize in economic sciences last year.

Today’s trivia question: Who won the Nobel Prize in economic sciences this year, announced on Monday?