Small business confidence continues to rise

One-fifth of owners plan to hire in next 3 months: Survey
||Last Updated: 04/04/2012

With its seventh consecutive monthly gain since late last summer, small business sentiment has returned to what can be considered normal for a sustainably growing economy, according to the Canadian Federation of Independent Business (CFIB).

The federation’s Business Barometer Index climbed to 67.7 in March, more than 1.5 points above February's level and six points above an August 2011 low.

Measured on a scale between zero 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 75 when the economy is growing, according to past results.

"Even though government debts continue to cast a shadow, the small business community is confident that increased government spending restraints will help to encourage domestic business activity," said Ted Mallett, vice-president and chief economist for CFIB.

Business owners in Alberta (74.6) and Saskatchewan (72) continue to be the most optimistic in the country. Big gains in business sentiment in Ontario (68.2) pushed its index above the national average for the first time in 18 months.

There's improving optimism in Manitoba (69.8), Quebec (64.6) and Nova Scotia (64.1), while levels fell back somewhat in British Columbia (63.8) and New Brunswick (66), found the survey of 821 CFIB members.

"Businesses in the arts, recreation and information products industries are the most optimistic about their year ahead, pushing their index beyond the 80 mark for the first time," said Mallett.

Manufacturers are also more positive than the average by a significant amount. Optimism in the natural resources industries and businesses in the health and education sectors is also above the average. Those in transportation, hospitality and business services are at the low end of the index — around the 60 level.

Staffing, recruitment

Planned hiring took a big swing to the positive in March, found CFIB. Twenty per cent of business owners plan to increase full-time staffing levels in the next three or four months, while only 11 per cent plan to cut back.

"While these numbers are heavily influenced by seasonal business patterns, they are as good as March 2011 findings and better than March 2010," said Mallett. "Hand-in-hand with hiring, small business owners expect to increase wages an average of 1.7 per cent and prices by 1.5 per cent during the next 12 months."

Short-term business performance expectations through the rest of the spring improved in March, following the pattern of the past couple of years, said Mallett. Forty-six per cent of business owners expect their businesses to strengthen in the next three or four months, compared to only 13 per cent who expect a weakening.

And capital spending plans continue to show a stable profile for March, found the survey.

"Thirty-five per cent of our respondents expect to invest in office or communications technology in the next three or four months, which is slightly higher than the average of the past two years. Also above trend is the confidence for planned investment in land and buildings," said Mallett.

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