MONTREAL -- Confidence among Quebec entrepreneurs took a beating with the start of the fall season, dropping significantly in September, according to the Canadian Federation of Independent Business (CFIB) Business Barometer.

The short-term (three-month) confidence index fell 12.5 points from August to 47.7 points. The long-term (12-month) index is down 8.8 points to 53.6 points.

"To lose so many points in one month for an index signals something significant," said CFIB vice-president of national research Simon Gaudreault. "You have to keep an eye on it."

The decline in Quebec is similar to that across Canada. The confidence index fell more than 12 points to 43.2 over three months and nine points over 12 months to 57.8 across the country.

Quebec and Ontario, the two most populous provinces in the country, saw the largest declines.

An index above 50 indicates that more entrepreneurs say their businesses are benefiting from a favourable trend than those who say they are in a bad situation. Below 50 points, the feelings are reversed.

"Both indicators are very low," says Gaudreault. "When the economy is at its full potential, the index hovers around 65 to 70."

Several clouds seem to be gathering on the horizon for small business owners.

Concerns about the Delta variant, labour shortages, supply chain challenges and the expected end of some government support programs are worrying many businesses, Geaudreault noted.

NO RETURN TO NORMALCY YET

The drop in confidence shows that it is still too early to withdraw support programs for SMEs, said Gaudreault. He pointed out that only 40 per cent of Canadian SME owners say they are back to normal sales levels.

"If not extended, the federal wage subsidy and rent subsidy are set to expire on Oct. 23. The conditions are not right to make it easy to do business," he said. "Rather than relaxing the support programs, we believe they should be extended or even enhanced depending on the circumstances."

Despite the vaccination, the health measures continue to have an impact on certain sectors, such as restaurants, tourism and retail. More than a quarter of Canadian businesses (26.3 per cent) say that domestic demand is insufficient to allow for increased sales or production.

"As a consumer, we're seeing a bit of a return to normalcy," he concedes. "Just because you can sit in the restaurant doesn't mean the restaurant owner is still making money. If only half his room can be filled, it doesn't mean it's profitable."

The decline in confidence is not just a problem for small and medium-sized businesses. The downward trend is also evident among Canadian households. The Conference Board's consumer confidence index fell 5.9 points to 109.3 in September. This is the third consecutive monthly decline and a seven-month low.

The mood is better at the top of large companies, according to a global report from KPMG.

Eighty-nine per cent of CEOs of Canada's largest companies say they are optimistic about the next three years. This is the highest score among executives in the 11 countries surveyed.

-- This report by The Canadian Press was first published in French on Oct. 5, 2021.