Currency Freefall Squeezes Record Share of Canada's Small Firmsby and
Canada’s slumping currency is causing headaches for its small businesses.
Some 38 percent of respondents to a monthly survey cited costs related to foreign currencies as an irritant, the highest on record, according to a report Thursday from the Canadian Federation of Independent Business. That compares with a longer-term average of 10 percent to 15 percent.
The Toronto-based CFIB’s broad index of business health declined to 54.3 for January, the lowest since the 2009 recession and down from 55.7 in December. The index ranges from zero to 100, and readings greater than 50 indicate business owners expecting stronger performance in the next year outnumber those expecting weaker performance. The index is usually at 65 to 70 when the economy is operating at full potential, the CFIB said.
“The dollar’s freefall” is “causing problems” said CFIB chief economist Ted Mallett, whose group represents 109,000 businesses. Small and medium-sized businesses with less than 500 workers make up about half of Canada’s economic output.
Canada’s dollar fell below 70 U.S. cents for the first time since 2003 this month and has dropped by 11 percent over the last year, a challenge for dealers in products that are often imported such as fresh produce, clothing and machinery.