Small business confidence falls in September

After a slight uptick in August, optimism among Canada’s small business owners dropped slightly in September, with the national Business Barometer index down by a point to settle at 59.0.

“We’re still seeing flatness in the overall economy and these results suggest confidence is stuck in neutral,” said Ted Mallett, Canadian Federation of Independent Business (CFIB) chief economist. “The index has been in a narrow range between 58 and 60 for six consecutive months, which means there is stability, yet it’s not the type of result that indicates overall strength.”

The national average is consistent with provincial numbers, most of which are also in a holding pattern. The big climber in September was Quebec, which jumped two points to lead the country at 67.1. Newfoundland & Labrador (41.1) and Alberta (47.1) both had small increases in September, but remain at the bottom of the provincial pack when it comes to business confidence.

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.

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All other provinces experienced varying degrees of decline from the previous month’s index: Prince Edward Island was down more than six points (63.9), British Columbia shed about two points (63.3), Nova Scotia dropped by less than a point (61.6), Ontario fell by just over two points (60.5), New Brunswick was down by nearly four points (59.2), Manitoba tracked downwards by less than two points (54.7), and Saskatchewan was down by less than a point (54.1).

Sector results were balanced for the most part, with manufacturing, information, financial and professional services, and natural resources tracking upwards. Importantly, though, business owners in the consumer-oriented retail, hospitality and personal services sector are reporting below-average performance expectations.

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Short-term employment plans remain sub-par relative to previous years, with only 17% of owners expecting to add staff in the coming months (almost as many, 14%, plan to cut back staff). Wage and price expectations are also flat, with planned increases of only 1.5% and 1.3%, respectively.

September 2016 findings are based on 573 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received through September 19. Findings are considered accurate to +- 4.1 per cent 19 times in 20.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.