January was a bitterly cold month in Alberta and the chill in the air was felt by the entrepreneurs in the province.
The latest Business Barometer, released Thursday by the Canadian Federation of Independent Business, shows that small business confidence dropped 1.3 points during the month to 37.0, which is the lowest in the country and well back from the national average of 55.3.
The CFIB said an index between 65 and 70 is an indication of a strong economy.
“Alberta small business confidence declined slightly in January 2020 compared to the large drops in November and December 2019,” said Keyli Kosiorek, CFIB’s Alberta Policy Analyst, in a news release. “This slight decline signifies that Alberta’s small businesses may be a bit more hopeful about the province’s economic prospects heading into 2020, but confidence still remains quite low. Rising costs such as property taxes, the federal carbon tax and the health of the oil and gas industry continue to weigh heavily on small businesses.”
The CFIB said only nine per cent of Alberta’s small business owners expect to increase their full-time employment levels over the next three months, while 34 per cent anticipate a decrease.
“While Alberta and Saskatchewan are still the most downcast provinces, the rest of the country seems to be following their lead,” said Ted Mallett, CFIB’s vice-president and chief economist. “Staffing plans for the next three months, in particular, remain weak, with more business owners planning to lay off staff than those planning to hire.”
National small business confidence dropped only 0.2 points to 55.3 in January. The provincial numbers are: Prince Edward Island (65.3), Quebec (63.5), Ontario (59.9), Nova Scotia (59.5), New Brunswick (59.4), Manitoba (57.4), British Columbia (56.4), Newfoundland & Labrador (48.6), Saskatchewan (42.7) and Alberta (37.0).
Rishi Sondhi, Economist with TD Economics, said small business confidence remained stuck at a low level in January.
“For perspective, the Barometer was only slightly above readings recorded in early 2016, when the economy was still reeling from the oil price shock. As such, the index is pointing to a subdued start to the year for the economy. This would be consistent with the Bank of Canada’s latest forecast which called for modest growth of 1.3 per cent (annualized) in the first quarter,” said Sondhi.
“Confidence remains in the doldrums in the oil producing provinces while holding up better elsewhere. Still, optimism was down in most provinces in January, adding to the muted tone of the report. Also, for the fourth straight month, a larger percentage of firms planned to cut payrolls instead of adding to them. This dovetails with the slowdown in hiring observed in recent months.”
Mario Toneguzzi is a business reporter in Calgary.
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