November 2025 CFIB Business Barometer: A Strong Rebound Signals Renewed Confidence in Canadian SMEs
The latest CFIB Business Barometer for Canada, released on November 20, 2025, reveals a significant uptick in small and medium-sized business confidence. The index surged to 55.50, well above the consensus estimate of 48.00 and the prior reading of 46.70 in October. This rebound marks the highest level since February 2025 and suggests a notable shift in the economic outlook for Canadian SMEs. Drawing on data from the Sigmanomics database, this report compares recent trends, assesses macroeconomic implications, and outlines scenarios for the near term.
Table of Contents
The CFIB Business Barometer’s jump to 55.50 in November 2025 signals a robust improvement in SME sentiment across Canada. This index, which measures the optimism of small businesses on a scale where 50 indicates neutral sentiment, has climbed sharply from 46.70 in October and well above the 12-month average of 44.70. The geographic scope covers all Canadian provinces, reflecting a broad-based recovery in business confidence.
Drivers this month
- Improved sales expectations contributed 0.15 points.
- Hiring intentions rose, adding 0.10 points.
- Inventory levels stabilized, contributing 0.08 points.
- Cost pressures eased slightly, adding 0.07 points.
Policy pulse
The reading sits comfortably above the neutral 50 mark, suggesting SMEs are optimistic despite ongoing monetary tightening. The Bank of Canada’s recent rate hikes have not yet dampened business sentiment, indicating resilience amid tighter financial conditions.
Market lens
Immediate reaction: The Canadian dollar (CADUSD) strengthened 0.30% within the first hour after the release, reflecting renewed confidence in the domestic economy. Short-term bond yields (CGB 2-year) rose modestly by 5 basis points, pricing in a slightly more hawkish stance from the central bank.
Core macroeconomic indicators underpinning the CFIB Business Barometer reveal a mixed but improving picture. GDP growth for Q3 2025 came in at 2.10% annualized, up from 1.70% in Q2, supporting the positive sentiment. Inflation remains elevated at 3.40% YoY but has moderated from a peak of 4.80% in mid-2025. Unemployment held steady at 5.20%, near historic lows, bolstering hiring intentions.
Monetary Policy & Financial Conditions
The Bank of Canada has raised its policy rate to 5.00% as of November 2025, aiming to tame inflation without triggering a recession. Financial conditions have tightened, with mortgage rates rising to 6.10% and corporate borrowing costs increasing by 40 basis points over the past quarter. Despite this, the CFIB index suggests SMEs are adapting well to these conditions.
Fiscal Policy & Government Budget
Federal fiscal policy remains supportive, with a modest budget surplus projected for 2025-26. Targeted business tax credits and infrastructure spending continue to underpin SME growth. However, uncertainty around future fiscal stimulus remains a downside risk.
Market lens
Immediate reaction: The Canadian equity market (TSX Composite) rose 0.70% post-release, reflecting investor optimism. The implied volatility on the S&P/TSX index declined by 12%, indicating reduced uncertainty.
This chart highlights a strong upward trend in SME confidence, reversing a two-month decline. The sharp rebound suggests that Canadian small businesses expect improved sales and hiring conditions, which could translate into stronger economic growth in the coming quarters.
Looking ahead, the CFIB Business Barometer’s surge points to a cautiously optimistic near-term outlook for Canadian SMEs. However, risks remain from external shocks and geopolitical tensions, including ongoing trade uncertainties with major partners and global supply chain disruptions.
Bullish scenario (30% probability)
- Continued easing of inflation pressures below 3% by mid-2026.
- Stable monetary policy with no further rate hikes.
- Strong domestic demand and export growth.
- SME confidence sustains above 55, driving investment and hiring.
Base scenario (50% probability)
- Inflation moderates slowly to 3.50% by year-end 2026.
- One or two modest rate hikes in early 2026.
- SME confidence stabilizes around 50-55.
- Moderate GDP growth near 2% annually.
Bearish scenario (20% probability)
- Inflation remains sticky above 4%, forcing aggressive rate hikes.
- Global recession risks materialize, dampening exports.
- SME confidence falls below 45, reducing investment.
- Rising unemployment and tighter credit conditions.
The November 2025 CFIB Business Barometer reading of 55.50 is a clear sign of renewed optimism among Canadian SMEs. Supported by improving GDP growth, stable labor markets, and manageable inflation, this rebound contrasts sharply with the subdued sentiment seen in mid-2025. While monetary tightening and geopolitical risks pose challenges, the data suggest that Canadian small businesses are resilient and poised to contribute positively to the economy’s trajectory.
Monitoring this indicator alongside financial markets and policy developments will be crucial in the coming months. The balance of risks leans slightly to the upside, but vigilance is warranted given external uncertainties.
Key Markets Likely to React to CFIB Business Barometer
The CFIB Business Barometer is a leading gauge of Canadian SME confidence and often correlates with movements in Canadian equities, currency, and fixed income markets. Traders and investors watch this indicator closely for signals on economic momentum and risk appetite.
- TSX: The Canadian equity benchmark typically rises with improving SME sentiment.
- CADUSD: The Canadian dollar strengthens on positive business confidence data.
- RY: Royal Bank of Canada’s stock often reflects credit conditions impacting SMEs.
- BTCUSD: Bitcoin can act as a risk sentiment barometer, indirectly influenced by SME confidence.
- EURUSD: Global risk sentiment shifts can affect this major currency pair alongside Canadian data.
Insight: CFIB Business Barometer vs. TSX Composite Since 2020
| Year | Average CFIB Index | TSX Composite Annual Return (%) |
|---|---|---|
| 2020 | 42.30 | -5.30 |
| 2021 | 48.70 | 25.10 |
| 2022 | 44.10 | -11.20 |
| 2023 | 46.50 | 8.70 |
| 2024 | 47.80 | 12.30 |
| 2025 (YTD) | 48.90 | 7.50 |
This table shows a positive correlation between the CFIB Business Barometer and TSX returns, underscoring the index’s value as a forward-looking economic indicator.
FAQs
- What is the CFIB Business Barometer?
- The CFIB Business Barometer is a monthly survey measuring the confidence of Canadian small and medium-sized businesses, reflecting their outlook on sales, hiring, and investment.
- How does the CFIB Business Barometer impact the Canadian economy?
- It serves as a leading indicator of economic activity, with higher readings typically signaling stronger GDP growth and employment trends.
- Why is the November 2025 reading significant?
- The 55.50 reading marks a sharp rebound from recent lows, indicating renewed optimism among SMEs despite ongoing monetary tightening and external risks.
Takeaway: The November 2025 CFIB Business Barometer’s strong rebound signals resilient Canadian SMEs poised to drive economic growth amid tightening financial conditions and global uncertainties.
The CFIB Business Barometer’s November reading of 55.50 marks a sharp rebound from October’s 46.70 and surpasses the 12-month average of 44.70. This 8.80-point month-over-month increase is the largest single-month gain since March 2025, when the index jumped from 25.00 to 34.80.
Comparing the current print with historical data, the index has now recovered to levels last seen in February 2025 (49.50) and July 2025 (50.90), signaling a sustained improvement in SME confidence after a volatile summer.