Small business confidence sinks in Canada as fuel, input costs climb: survey
Small business confidence in Canada has taken a sharp step back in March as rising fuel and input costs, coupled with weak demand, weigh on entrepreneurs.
The long‑term, 12‑month small business confidence index fell 9.5 points to 55.8 in March, finds the Canadian Federation of Independent Business’ (CFIB).
The decline wipes out much of the gradual improvement seen over the past year and brings sentiment back to levels last recorded in the fall.
“Just when we saw a glimmer of hope, fuel prices and supply chains are causing hardships again,” said Andreea Bourgeois, CFIB director of economics. “The 12‑month index improved gradually over much of the past year, though with some fluctuations, but this month, it has dropped sharply to levels recorded last fall.”
The CFIB index is measured on a scale from 0 to 100. Readings above 50 indicate that owners expecting stronger business performance over the next three or 12 months outnumber those expecting weaker performance. While the current reading of 55.8 still suggests more optimism than pessimism, the sudden drop points to growing uncertainty among small firms.
CEO confidence in global revenue growth has dropped to its lowest level in five years, with artificial intelligence (AI), cyber risk and geopolitical pressures forcing employers to rethink workforce and capability strategies, according to a previous survey.
Cost pressures intensify as demand weakens
Cost pressures intensified across several fronts in March, according to CFIB. The organisation reports the share of businesses worried about fuel costs jumped to 50%, up from 36% in February. Concerns about input products and raw materials also climbed, with 44% of small firms flagging these issues as top of mind, compared to 32% the previous month, based on the survey of 651 respondents conducted March 3–10.
Average wage increase plans remained steady at 2.2%, the survey found. However, price plans moved higher, with businesses now expecting to raise prices by an average of 2.7%, up from 2.2% in February. That divergence suggests many owners are attempting to pass at least part of their higher operating costs on to customers.
Beyond costs, demand conditions have also deteriorated. More than half (57%) of small businesses reported challenges related to insufficient demand in March, up from 50% in February, according to CFIB. The organisation noted this indicator has been above its historical average of 38% for two and a half years and is now at its highest ever level, except for March 2025, when it reached 59%.
“Weak domestic and international demand has been a major pain point for small business owners for the past two years, and we’re already hearing concerns that high prices at the pump will put even more pressure on both businesses and consumers,” said Simon Gaudreault, CFIB chief economist and vice‑president of research.
Call for government action
Gaudreault says the policy environment is compounding the challenges facing small firms.
“There’s still a lot of uncertainty, and so far, governments are failing when it comes to small business policies,” he says. “While we may not be able to control much in the short term, it’s crucial that Canada move quickly on projects that increase our domestic energy supply and capacity so that we can better weather future instability.”
Things can also get worse. In February, in a 6–3 ruling, the United States Supreme Court concluded it was not legal for U.S. President Donald Trump to use the International Emergency Economic Powers Act, better known as IEEPA, for his “Liberation Day” tariffs and fentanyl‑related duties on Canada, Mexico and China.
