Small-Business Confidence in Ontario on Steep Decline, Fuel Prices a Factor

A woman gasses up at a gas station in Mississauga, Ont., on Feb. 13, 2024. The Canadian Press/Christopher Katsarov

Ontario’s business confidence level for the next 12 months saw a “disturbing” decline in April due to mounting costs, including the surge in fuel prices, according to a small-business advocacy group.

In an April 25 press release, the Canadian Federation of Independent Business (CFIB) said “insurance costs and fuel costs tied as the top reported cost constraint for Ontario small-business owners, followed by wage costs and tax/regulatory costs.”

CFIB referred to April data from its monthly Business Barometer index, revealing that high insurance costs and fuel costs were both identified by 70 percent of Ontario businesses as a major cost constraint. Additionally, electricity costs were cited by 48 percent of business owners, while 24 percent pointed to “other energy costs.”

The report came roughly three weeks after the federal government raised the carbon tax from $65 per tonne of greenhouse gas emissions to $80 on April 1.

CFIB had earlier urged Ottawa to stop the tax hike.

“Small businesses are being crushed by rising costs on all fronts, and the upcoming April 1 carbon tax increase will only add salt to the wound,” Jasmin Guenette, CFIB’s vice president of national affairs, told The Epoch Times in an emailed statement in March.

The group’s monthly Business Barometer index tracks the state of the economy against the gross domestic product. It consists of a long-term index that measures confidence level for the next 12 months and a short-term index that measures the level for the next three months.

The indices are measured on a scale from 0 to 100, with a level above 50 indicating that more business owners expect stronger business performance in the coming period than those anticipating weaker results.

In April, Ontario’s long-term business confidence level fell to 49.2, a decline of 6.7 points since March, tying with Quebec for the third-lowest level in Canada, after Saskatchewan and New Brunswick.

Before the COVID-19 pandemic, index levels usually ranged between 65 and 75 when the economy was growing, the press release said.

Ontario’s short-term business confidence level also fell. It dropped to 48.4, a decline of 1.6 points since March, the second-lowest level in the country behind only Saskatchewan.

“Rising costs on everything are making it almost impossible for small businesses to achieve any meaningful headway on recovery,” Ryan Mallough, CFIB’s vice president of legislative affairs for Ontario, said in the press release.

“Sadly, far too many CFIB members who’ve been around for years are feeling that running a business is becoming all pain and no gain.”

Insufficient Demand

The April index also shows that insufficient demand persisted for the eight consecutive month as the top constraint on sales or production growth in Ontario, the press release said. Over half (57 percent) of Ontario’s small- and medium-sized businesses reported facing insufficient demand from both domestic and foreign sources, marking the highest share since the pandemic.

“With demand for both goods and services consistently low, it’s still a challenge for many small businesses to get back to their normal revenue level for this time of year,” Julie Kwiecinski, CFIB’s director of provincial affairs for Ontario, said in the press release.

“The minute small businesses get an inch ahead, they’re hit with even more increased costs, forcing some to pass down at least a portion of these extra costs to customers.”

Ms. Kwiecinski added that small businesses need cost relief from the government.

“We continue to urge the Ontario government to focus on small business affordability measures, including lowering the Small Business Tax Rate (SBTR) and increasing the SBTR’s threshold that has been stuck at $500,000 since 2007,” she said.

Chandra Philip contributed to this report.