The Canadian Federation of Independent Business says the outlook among entrepreneurs for the 12 months ahead improved slightly from last month but remains quite low.
The group says its latest survey found its small business confidence indicator registered 50.9 index points in December, up 0.9 points over last month.
It says that while an improvement, it remains at levels usually only seen around recession periods, while the short-term outlook dropped more than three points to 40.2.
The group says firms in retail, agriculture and construction were the least optimistic on the year ahead with readings below 50 points.
In some measures though the business situation looks similar to where it was before the pandemic, with 38 per cent saying their business is in good shape and 17 describing it at bad, which tracks very closely to what respondents said in December, 2019.
Businesses, however, continue to struggle with cost pressures, with 73 per cent saying high fuel and energy prices are causing difficulties while 61 per cent said wages are an issue, and more than half of small businesses still have the pandemic overhangs of below-normal sales and higher debt loads.