Small business confidence ends 5-month decline

But Quebec less optimistic: Surveys
||Last Updated: 10/03/2012

Optimism among Canada's small and medium-sized businesses rose last month for the first time since March, according to the Canadian Federation of Independent Business (CFIB).

Its Business Barometer index increased two points in September to 62, from 60 in August. (Measured on a scale of zero and 100, an index level above 50 means owners expecting business performance to be stronger in the next year outnumber those expecting weaker performance.)

"After a five-consecutive month decline in business confidence through the spring and summer, small business owners were a little more upbeat in September," said Ted Mallett, CFIB's chief economist and vice-president. "Despite this good news, however, the index level still suggests Canada's economy is growing at below-average rates."

Small business owners in Newfoundland and Labrador (75) are now the most optimistic in the country. Entrepreneurs in Alberta (71.1) and Saskatchewan (67.6) are close behind, while optimism is close to the national average in New Brunswick (62.8), Quebec (61.2), Ontario (60.1) and British Columbia (59).

Optimism is much lower in Nova Scotia (55.6), Manitoba (54.7) and Prince Edward Island (44.6), found the survey of 918 CFIB members.

"Overall, 36 per cent of business owners reported shortages of skilled labour as a constraint on their business," said Mallett. "This is the first time since the recession that concerns over the shortage of skilled labour have exceeded worries about insufficient customer demand."

Full-time hiring plans continue to be better than average for this time of the year: 18 per cent of business owners plan to hire full-time staff in the next three or four months compared to 12 per cent who said they will cut back. These numbers are much more positive than the findings from September 2011 and 2010, said CFIB.

Overall, 41 per cent of business owners described their state of business to be in good shape, compared to 12 per cent who said their state of business is bad.

Different story in Quebec

However, a separate survey by Fonds de solidarité FTQ found economic instability and uncertainty continue to undermine executives' confidence and optimism at small and medium-sized enterprises (SMEs).

The global outlook now stands at 63.4 points, a decrease of 2.4 points since the last index in May 2012 (65.8), and a decrease of four points since September 2011 (67.4), found the survey of 210 SME managers of Quebec companies.

The indicator for the future of Quebec SMEs overall saw a decrease of 6.7 points since September 2011 and now stands at 61.4 points. Managers are somewhat more confident about their own enterprises, but this indicator has also decreased by 4.9 points during the last year to stand at 70.1 points.

And while a majority of SMEs expect an increase in their sales and the number of employees over the next 12 months, both these indicators have declined since September 2011.

The cost of operations and labour recruitment represent the two main concerns for 55 per cent of SME managers, found the survey. The cost of primary materials (14 per cent), access to and cost of credit (13 per cent), the rise of the Canadian dollar (11 per cent) and competition from emerging economies (nine per cent) represent the other main concerns.

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