Canada Markets

CFIB's Ag Sentiment Index Slips in December

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart shows the monthly Business Barometer Index for Agriculture for each month of 2018 (blue line) when compared to 2017 (grey line) and the five-year average for each month (brown line). While the index has shown improvement since mid-year lows, it dipped for the first time in five months in December and remains below the index reported over recent years. (DTN graphic by Cliff Jamieson)

The Canadian Federation of Independent Business (CFIB) Business Barometer report for December shows a significant 7.6-point drop in the index for small business in Canada to an index of 53.6, the lowest level reported since March 2016 and the largest month-over-month drop reported in more than 10 years, or since October 2008.

A month-over-month drop was reported for 12 of 13 business sectors analyzed across the country, with only the transportation index showing an increase since November's report, while the largest month-over-month drop was seen in the Professional and business services sector of 13.3.

The CFIB has developed its index to range from zero to 100, with an index above 50 indicating that business owners expect a stronger business performance in the year ahead while an index of 65 to 70 is viewed as a sector or economy that is operating at full capacity.

This data aligns with a Globe and Mail study released on Thursday, which is focused on the broader economy. A Nanos survey conducted by the Globe and Mail released on Dec. 27 shows that more than 50% of Canadians think the economy will worsen over the upcoming year, while 35% of respondents felt the economy would improve.

These results are despite the Bank of Canada Governor Stephen Poloz year-end speech that reported the economy has been operating near capacity for the past year while unemployment is at its lowest point in decades. The country's central bank is calling for a "moderation" of the economy in the year ahead and will remain on the radar ahead of the fall of 2019 federal election.

The CFIB's Agriculture Index fell for the first time in five months to 50.7, one of the smallest month-over-month drops across the 13 business sectors monitored, while the range of results reported over the year was the third largest of the 13 business sectors and the average index reported over the 12 months is the lowest of all sectors at 49.5.

The design of the index would suggest that Ag managers responding to this survey are very much on the fence and cautious over the business prospects looking ahead into 2019. The 50.7 index for December is down from a reported 57.5 in December 2017, while is the lowest December index reported since an index of 45.1 was reported in December 2008. At the same time, the response is perhaps not unlike that from the wider Canadian population as shown in the Globe and Mail study.

When one considers strictly trade, a survey conducted by Economic Development Canada points to the year-end EDC Trade Confidence Index at 73.8, down 2.7% from mid-year 2018. A reported 64% of exporters of all goods and commodities feel that export sales will increase in the next six months, a number that is down 11% from mid-year. A reported 29% of exporters expect world economic conditions will deteriorate in the six months ahead, which is up 11% from mid-year.

This study concludes that protectionist trade policies are affecting 32% of Canada's exporters' strategies, while 33% are affected by the U.S. steel and aluminum tariffs. Also of interest, this survey of 1,000 Canadian exporters resulted in 52% being neutral on the Canada-United States-Mexico trade agreement.

Cliff Jamieson can be reached at

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