Business Barometer: confidence among small biz takes a dip

Small business optimism slipped back in November, erasing most of the strong gains noted in the previous month. CFIB’s latest Business Barometer® Index fell almost two points for the month, down to 65.9. Despite the decline, though, the latest reading is the third-best seen so far in 2014.

As in the previous month, the change nationally was driven by Ontario, which saw a six-point decline in its index level to 65.7—cancelling out its six-point increase in October. A decline of almost four points in Saskatchewan’s index to 63.4 also helped drive the national numbers lower. Changes in the other provinces were more modest. General optimism continues to be highest among businesses in British Columbia (73.9) and Alberta (73.6), and lowest in Quebec (58.9), Prince Edward Island (59.0) and Nova Scotia (59.9). Optimism in Newfoundland and Labrador (67.7) and Manitoba (63.8) remain closer to the national average.

The industry picture is a little more stable in comparison—but weakness among natural resources, construction, manufacturing and hospitality businesses more than offset improving outlooks in retail, transportation, information and agriculture.

On a scale between 0 and 100, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. One normally sees an index level of between 65 and 70 when the economy is growing at its potential.

Other indicators from the survey point to good or at least stable conditions. Employment plans are following normal seasonal patterns; 20 per cent of owners are expecting to take on more full-time staff in the next few months, while 12 per cent plan to cut back. Also, 44 per cent of owners say their businesses are in good shape, versus only 13 per cent in bad shape—among the largest spreads seen post-recession.

The full report by Ted Mallett, CFIB Vice-President & Chief Economist, is available on the CFIB website.