Small uptick in small business confidence

But only 11 per cent of Alberta business owners say their business is in a good state, compared to 48 per cent who say their business is in bad shape

Small business outlook for the next 12 months is on the mend, but other measures of business health remain far below historic norms, according to the Canadian Federation of Independent Business (CFIB)’s Business Barometer

In Canada, the index rose by 6.7 points in July to 61.3 while in Alberta it moved up 2.4 points to 58.1.

The CFIB said an index level nearer to 65 indicates that the economy is growing at its potential.

“While it appears small business owners are feeling more confident about where they’ll be in a year, the unique nature of this economic shock is complicating the way we look at traditional indicators,” said Ted Mallett, CFIB’s chief economist, in a news release. 

“It’s likely that many business owners have much lower expectations of what good performance means 12 months out. Shorter-term outlooks are still very weak. Additionally, we might be seeing some survivor bias at play— a notable number of weaker businesses polled in the spring are no longer responding to the survey, suggesting many may have failed in June and July.”

For Canada, the CFIB said 37 per cent of business owners said their business was in bad shape while 22 per cent said it was in good shape, a small improvement over June’s numbers. Hiring plans remained stagnant, with 14 per cent of business owners expecting to add full-time staff in the next three months and 30 per cent planning to cut back. Businesses’ shorter range 3-month outlooks are still on the same level as the 2008-09 recession.

The national organization said that on average Alberta businesses are operating at only 53.2 per cent capacity, a 3.6 per cent improvement over June, but well under what is considered necessary to be reliably profitable.

Only 11 per cent of Alberta business owners say their business is in a good state, compared to 48 per cent who say their business is in bad shape. Hiring plans remain quite weak in Alberta with only nine per cent of business owners planning to hire full-time staff in the next three months, while 32 per cent foresee cuts, added the CFIB.

“Even though Alberta is well into stage 2 of its economic relaunch plan, small business sentiment is only showing cautious improvement,” said Keyli Kosiorek, CFIB’s Alberta policy analyst. “The small uptick in optimism points to the fact small business recovery is going to be a long, tough road and our province’s job creators need our support now more than ever.”

Ontario posted the highest optimism level at 66.0, followed by Nova Scotia (62.4), Saskatchewan (58.3) and Alberta (58.1). Quebec (39.6), Prince Edward Island (41.7) and New Brunswick (50.5) posted the lowest results. British Columbia (55.0), Manitoba (55.5) and Newfoundland and Labrador (56.1) were middle of the pack this month.

The natural resources (40.9), agriculture (42.8), and arts and recreation (47.1) sectors were the least optimistic this month. Professional services (62.9), wholesale (62.6) and retail (62.0) came in at the higher end of the optimism scale.

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