Small business confidence dips in March: CFIB
Business Barometer results buoyed by stronger levels in the Prairies.
TORONTO — Small businesses across Canada were a tiny bit less optimistic in March than February, according tot he latest Business Barometer reading from the Canadian Federation of Independent Business’ (CFIB).
The index settled at 64.1 compared to 64.4 last month and 64 in January — what CFIB describes as “a stable start” to 2014.
“The national number is buoyed somewhat by very good results in the prairies,” said Ted Mallett, CFIB’s vice-president and chief economist. “Alberta and Saskatchewan are traditionally strong, and Manitoba also had a modest rebound in March. This pocket of strength offsets somewhat less encouraging numbers in other parts of the country.”
Manufacturing saw a decline to 64.3 from 66.4 the previous month, but ahead of the 63.5 recorded in March 2013. Other declines were registered in transportation, professional services and hospitality.
Natural resources was ahead at 64.3 compared to 63.2 in February but way behind last year at 8.1.
Optimism levels improved in agriculture, construction, wholesale, retail and information, as well as arts and recreation.
Mallett said small businesses are sending some mixed signals about where the economy is headed. “Hiring expectations remain strong, with 26% of small businesses expecting to add full-timers, and only 7% expecting to cut staff in the coming months. That is very encouraging. However, only 36% see their businesses as being ‘in good shape’, and that is the lowest reading we’ve seen since mid-2010.”
For the first time in nine months, Alberta found itself back on top, with a 72.7. Saskatchewan (66.4), Manitoba (61.4), and to a lesser extent Ontario (63.7), also gained ground in March. Meanwhile, optimism levels in Newfoundland & Labrador (65.9), Quebec (58.7) and Prince Edward Island (57.6) headed down. BC (71.2), Nova Scotia (57.9) and New Brunswick (56.9) saw little change.
TD Economics blames the harsh winter for business conditions noting GDP grew just 1.4% in the first quarter. But economic analyst Sonny Scarfone says in a bulletin that the bank is forecasting a better Q2 with 2.2% growth.
He also notes only 36% of business owners see their business as being in good shape, which represents an almost four-year low, although it doesn’t appear to be affecting hiring expectations.
Although the report represents a setback to an expected convergence between the eastern manufacturing-oriented provinces and the energy-producing provinces, he sees it as we temporary. “The depreciation of the loonie and a flat commodity profile should help level the playing field between provincial growth performances,” he says.
Measured on a scale of 0 and 100, an index level above 50 means owners expecting their businesses’ performance to be stronger in the next year outnumber those expecting weaker performance. Index levels normally range between 65 and 70 when the economy is growing at its potential.
The March 2014 findings are based on 1,115 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Findings are statistically accurate to +/- 2.9% 19 times in 20.
Click here for the survey results.