Canada's small business confidence dropped 11.7 points in May, falling to 46.3, finds the Monthly Business Barometer by the Canadian Federation of Independent Business (CFIB) released on Thursday.
Main factors for the loss of confidence are persistently high fuel cost concerns affecting 72% of firms in May, constant weak demand, and expectations for prices to go up, stated CFIB.
The average price increase plans are now above 3% for the second consecutive month, which is much higher than Bank of Canada's target rate for inflation, it added.
"Many small firms are stuck in a grind. Demand is weak, costs -- especially fuel- are high and conditions don't show signs of improving," said Andreea Bourgeois, CFIB director of economics. "This environment is not conducive to strong orders or investment."