Small business sentiment continued to bounce back from trade war woes in May but remained at a level consistent with a recession. Nationally, the Canada Federation of Independent Business’s (CFIB) 12-month confidence index rose five points from 34.7 in April to 40 points in May, with the short-term index up 1.9 points to 42.4 points. In normal times, these measures are at or above 60 points. Trade-reliant businesses, understandably, were particularly pessimistic, with exporter sentiment at 26 points, and importer confidence at 29.
The long-term index in B.C. rose by 3.2 points to 39.1 points, but was still in negative territory, and fifth-highest among provinces. The short-term index improved more, up 7.4 points to 44.4, the highest level since December 2024. Insufficient demand and shortages of skilled labour continued to be the most-noted constraints to sales or production growth for businesses in B.C. A shortage of working capital and physical space also limited sales growth. Tax and regulatory costs, wage costs and insurance costs were cited as the top input cost constraints. Occupancy, product input and fuel costs also made the list. Full-time staffing plans improved, with 12 per cent of surveyed businesses expecting to increase staff levels. That said, 21 per cent were still planning to reduce full-time employment levels — the greatest number in the last year.
In the labour market, B.C. shed more than 6,000 positions in March, according to Statistics Canada’s latest Survey of Employers, Payroll and Hours. The decline of 0.2 per cent suggests drag from the trade war and U.S. tariffs. Goods-producing industries reported nearly 3,400 fewer positions (down 0.9 per cent) while services-producing industries lost nearly 3,600 fewer positions (down 0.2 per cent).
The job vacancy rate edged up to 3.5 per cent in March, with total vacancies rising to 88,350 — highest level since December 2024. The job vacancy rate has remained below four per cent since May 2024. This points to weak hiring sentiment, which has further deteriorated with tariff challenges. Surveys from the CFIB and the Bank of Canada point to the persistence of a soft hiring environment.
Within goods-producing industries, the majority of the decline was concentrated in the resources sector, which shed nearly 3,800 positions (down 14.3 per cent). Construction also saw a modest 300-position decline (down 0.2 per cent). The notable decrease in payroll counts on the services side was in accommodation and food services, which reported a loss of more than 1,500 positions (down 0.7 per cent). Finance and insurance also had 950 fewer positions (down one per cent), and the professional, scientific and technical services sector reported more than 900 fewer positions (down 0.5 per cent). The declines were offset by growth in health care and social assistance, which added more than 1,900 positions (up 0.5 per cent).
On the wage front, seasonally adjusted average weekly earnings in B.C. rose 0.4 per cent to top $1,300. Going forward, we expect hiring momentum will continue to slow as businesses temper investment and expansion, and remain cautious due to economic uncertainty.
Bryan Yu is chief economist at Central 1.
