MNI: Canadian Business Sentiment Best Since Trade War Began

Canadian business sentiment has risen to the highest since Donald Trump ratcheted up tariffs this spring, though a majority of firms are struggling with weak demand, a survey from the CFIB trade association showed Thursday.

The Canadian Federation of Independent Business sentiment barometer climbed 8.7 points to 55.5 this month, extending a rebound from a low of 25.5 in March. The figure remains below a historical average of about 60. 

“Confidence levels have been seesawing this year, reflecting the ongoing uncertainty and mixed feelings small businesses have about the state of the economy,” chief economist Simon Gaudreault said in a report.

Industries most affected by tariffs on autos, steel and aluminum showed improvement. The manufacturing index rose to 50.6 from 44.7, also up from a March low of 19.9. Transportation and warehousing sentiment rose but at 45.8 was the lowest among a dozen industries surveyed.

Respondents also expect price increases of 2.5% over the next 12 months, down from 2.7% in October, and expected wage gains remain modest at 2.2%.

Those results are consistent with the Bank of Canada's decision to lower its policy rate a quarter point to 2.25% Oct 29, when it said that if the economy advances as expected it has done enough to support output and keep prices in check. 

Risk remains, with Trump having canceled Canadian trade talks and officials suggesting a new trade deal must wait until next year's USMCA pact review. Fifty-six percent of firms said their growth is limited by weak foreign or domestic demand.