Only 12% of small businesses plan to hire in coming months while 18% eye layoffs: CFIB
Canada’s small business owners are entering the fall with only marginally improved optimism, as confidence levels continue to hover near historic lows.
The Canadian Federation of Independent Business (CFIB)’s latest Monthly Business Barometer shows long-term small business confidence inching up to 50.2 in September, a level the organization says reflects ongoing uncertainty, weak demand, and rising costs.
“Business owners have hardly been positive this year, and it’s not surprising given the trade and economic uncertainty, declining demand, and rising operational costs,” said Simon Gaudreault, CFIB’s Chief Economist and Vice-President of Research.
The Bank of Canada cut the interest rate to 2.5% yesterday, citing "ongoing uncertainty":
"After remaining resilient to sharply higher US tariffs and ongoing uncertainty, global economic growth is showing signs of slowing. In the United States, business investment has been strong but consumers are cautious and employment gains have slowed. US inflation has picked up in recent months as businesses appear to be passing on some tariff costs to consumer prices. Growth in the euro area has moderated as US tariffs affect trade. China’s economy held up in the first half of the year but growth appears to be softening as investment weakens. Global oil prices are close to their levels assumed in the July Monetary Policy Report (MPR). Financial conditions have eased further, with higher equity prices and lower bond yields. Canada’s exchange rate has been stable relative to the US dollar."
Labour market signals weaken
Hiring conditions remain one of the most acute challenges. According to the survey, just 12% of businesses plan to hire in the coming months, while 18% are considering layoffs.
Wage plans remain modest, with businesses anticipating average increases of 2.2%. At the same time, 66% of firms reported wage costs as a pressing concern in September, up from 59% in August.
“Based on our data, it does not look like the labour market will strengthen anytime soon,” said Andreea Bourgeois, Director of Economics at CFIB. “The share of businesses with hiring plans remains below its usual seasonal pattern, while more and more firms have recently stated layoff plans, significantly exceeding seasonal patterns.”
Meanwhile, taxes and regulatory costs remain the top pressure point for small firms, cited by 67% of respondents. Close behind are insurance costs, flagged by 66% of business owners. Beyond these structural costs, weak demand continues to weigh heavily, with 55% of firms saying it is dampening growth.
The report also highlights a sharp rise in the share of businesses struggling with capital equipment and technology expenses. At 36%, this marks a record high, raising red flags about small firms’ ability to invest in productivity-enhancing tools.
Adding to the strain, 20% of businesses reported ongoing difficulties distributing their products in the wake of labour disruptions earlier this year.
Shifting economic backdrop
While recent months have seen a slowdown in tariff announcements and trade disputes, the challenges for small businesses are far from over.
Gaudreault suggested Canada may be entering a “new phase on the economic calendar,” where long-term adjustments to policy and trade relationships will shape business outlooks.
“Certainty, stability and confidence remain in short supply and sending the right policy signals this fall could help turn the tide,” he said.
With confidence flatlining and cost pressures mounting, CFIB warns that small businesses may struggle to contribute to a broader economic recovery unless policymakers address their concerns.
