Quotes from TD Economics:
– Canada small business confidence appears to have stumbled somewhat at the start of the third quarter. That said, the index can be subject to large swings, and currently remains above sixty, consistent with near-trend growth. Some of the weakness in the report may reflect concerns regarding the impacts of June flooding in the prairie provinces, reflected in the weak reading for the agricultural sector. Qualitative measures in the report also suggest an improving business environment: the share of firms reporting that the general business situation for their company was good rose 0.8 percentage points on the month, while the share reporting the situation as bad fell by 0.6 p.p.
– The CFIB index is pointing to economic growth below our current tracking for 2.5% (annualized) in Q2 and our 2.8% projection for Q3, done in June. The key question is whether small business confidence is signaling a downside risk to our forecasts or whether small businesses are being unduly pessimistic. We suspect the latter.
– Looking forward, we expect confidence to recover in the coming months, reflecting the improving economic situation in the United States, the relatively weak Canadian dollar, and a positive investing environment. July’s report does not change our view that business investment is poised to accelerate in Canada.
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