Canadian small business confidence is showing strong signs of recovery, reaching its highest level since May 2022. The Canadian Federation of Independent Business (CFIB)'s Business Barometer long-term index climbed to 64.8 in February 2026, a notable increase from January's revised 59.3. This indicates a significant boost in optimism among small businesses regarding their prospects for the year ahead.
The rise in confidence is widespread, with long-term optimism increasing in almost all provinces except Saskatchewan. The short-term optimism index, reflecting a three-month outlook, also saw a substantial jump, surging 8.7 points to 61.2. This improvement in sentiment suggests that small businesses are feeling more positive about the immediate future. "While there's still a great deal of uncertainty, especially since the recent announcement of the 10% global tariff, many small firms are feeling more optimistic heading into the spring. However, we're not out of the woods yet as cost pressures remain,".
Despite the encouraging figures, challenges remain for small businesses across Canada. Insufficient demand continues to be a primary concern, with 49% of small firms identifying it as a major impediment to growth, although this is an improvement from 54% in January. Cost pressures also persist, with wage costs (58%), insurance costs (58%), and tax and regulatory costs (58%) being the top constraints in February.
The CFIB, representing over 100,000 small and medium-sized businesses across Canada, emphasizes the need for supportive policies to foster a stronger entrepreneurial environment. Andreea Bourgeois, director of economics at CFIB, noted that Canada is facing an "entrepreneurial drought," with more businesses exiting the market than entering. The CFIB advocates for policies that reduce taxes and internal trade barriers to bolster the competitiveness of Canadian small businesses.
