CFIB Business Barometer: Small Business Confidence Remains Steady in January

Why It Matters

Steady confidence signals resilience but cost pressures could dampen expansion, affecting Canada’s broader economic outlook.

Key Takeaways

• Confidence index 59.5, near historical average.
• 70% cite tax and regulatory costs as challenge.
• Record 40% report equipment/technology cost constraints.
• Hiring net positive: 15% plan hires, 10% plan layoffs.
• Weak demand limits growth for 54% of firms.

Pulse Analysis

Small‑business confidence in Canada edged to 59.5 in January, a figure that hovers just under the long‑term average but still signals optimism among owners. The CFIB’s index, which measures expectations for the next three to twelve months, reflects a cautious belief that sales and growth will rebound after a turbulent 2025. This sentiment is reinforced by a shift in hiring intentions, with 15% of firms now planning to add staff—a reversal from the layoffs‑heavy period that began in mid‑2025.

Despite the upbeat outlook, cost pressures remain a dominant headwind. More than seven in ten firms cite tax and regulatory burdens as a primary challenge, while insurance, wage inflation, and a record 40% reporting equipment or technology cost constraints further erode margins. These expense spikes force many owners to defer capital investments, trim operating budgets, or accelerate asset purchases to avoid tariff penalties. The cumulative effect threatens to curb the very growth that confidence metrics suggest, underscoring the need for policy relief and stable fiscal conditions.

The labor market dynamics add another layer of complexity. Hiring turned net positive for the first time since August 2025, yet only 15% of businesses plan to recruit, indicating a measured approach to expansion. Simultaneously, weak demand continues to hamper more than half of small firms, keeping revenue growth modest. For policymakers, fostering a predictable regulatory environment and addressing cost drivers could translate confidence into tangible productivity gains, bolstering Canada’s entrepreneurial engine throughout 2026.