Small businesses less optimistic in September: CFIB
Business Barometer shows manufacturing slips a little but still confident.
Canadian Federation of Independent Business
TORONTO — Small business optimism was down but still relatively strong in September, according to the Canadian Federation of Independent Business (CFIB).
Its Business Barometer index slipped 1.4 points from August’s 65.9, but September’s 64.5 score still counts as one of the better results for 2013.
Manufacturing was down from August’s 68.5 to 64.1, while natural resources jumped from 56.4 to 63.1.
“Newfoundland and Labrador, Alberta and Saskatchewan continue to lead the way in terms of small business confidence,” said Ted Mallett, CFIB’s chief economist and vice-president. “This seems to be one pattern we can depend on month after month.”
Confidence in Ontario had surged in recent months, peaking in August at 67.8. September saw confidence in Ontario drop sharply to 63.6. Drops were also seen in New Brunswick (55.5) and PEI (47.6). Nova Scotia, Manitoba and BC saw modest gains (61.6, 60.7 and 67.9), while Quebec’s score, stable at 59.2, remained well below the national average.
The strongest sectors were health and education, the arts and wholesale, while transportation remained a weak point.
“The good news is that overall, the other indicators are stable,” added Mallett. “Hiring plans are typical for this time of year, 40% of small business owners report a generally good state of business, and orders and accounts receivables show gradual improvement. Price and wage expectations are stable, and there are no big shifts being reported in operating constraints or pricing pressures.”
Sonny Scarfone, a research associate writing in a TD Economics bulletin, observed optimism has been in the 64.2 to 65.9 range over the summer, above the 59.4 to 62.4 range that prevailed during the second quarter.
“This increase supports our view that growth will pick up to 2.3% in Q3 versus 1.7% in the previous quarter, he said, noting positive full-time hiring plans should help alleviate some of the recent weakness in the labour market.”
Measured on a scale of 0 to 100, an index level above 50 means owners expecting their businesses’ performance to be stronger in the next year outnumber those expecting weaker performance. According to past results, index levels normally range between 65 and 70 when the economy is growing at its potential.
The September 2013 findings are based on 1,126 responses, and are statistically accurate to +/- 2.9 per cent 19 times in 20.