The CFIB Business Barometer remained largely unchanged in May at 60.6, after declining to 60.5 the previous month. Keeping in mind that an index level in the range of 65 to 70 is usually observed when the economy is growing at its trend, the current reading is consistent with an economy growing below its potential growth rate of around 2%.Small and medium-sized business confidence sailed on calm waters in May, which is good news after last month’s sharp decline. Further, some industries that have been lagging behind since the beginning of the year saw a modest improvement in business sentiment, most notably the transportation and natural resources sectors.“Buoyed by the recent stabilization in oil prices, the natural resources sector saw its confidence level rise for the second consecutive month in May. As such, it appears that the bulk of the economic shock from lower oil prices has been front-loaded, as was anticipated by the Bank of Canada. This supports the Bank’s decision on Wednesday to maintain the policy rate unchanged at 75 bps. With the worst of the oil price shock behind us, we expect the Bank to keep rates on hold until the end of 2016.” notes TD Economics
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