Small business confidence shrinks
June 27, 2013, Toronto – The confidence in Canadian small businesses fell sharply in June, and is now at its lowest point since July 2009, according to the Canadian Federation of Independent Business (CFIB).
The index fell almost three points to 59.4 from May's 62.1, a fourth consecutive monthly decline.
"Weak demand appears to be driving this," said Ted Mallett, CFIB's chief economist and vice-president. "Only 73 per cent of respondents report that new orders are "normal" or better, while 40 per cent say domestic demand is limiting business expansion—both out of tune with recent results."
The drop in optimism is centered almost entirely in Ontario and Quebec (56.8 and 55.3, respectively). Confidence remains strongest in Alberta (68.6), with Saskatchewan (67.3) edging up. Newfoundland and Labrador (66.3) and British Columbia (65.6) are also above the national average. There is very little change in the under-performing Maritimes, with New Brunswick (59.2) hanging around the national average, and Nova Scotia (53.6) and Prince Edward Island (53.3) lagging behind.
By sector, construction, natural resources and hospitality were weakest, while the information and financial services sectors remained strong.
"Despite weak results, there are signs we are nearing a floor," added Mallett. "Short-term employment plans are net positive, while reporting of the general state of business health is holding steady."
Measured on a scale of 0 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.
According to past results, index levels normally range between 65 and 70 when the economy is growing at its potential. The June 2013 findings are based on 1,708 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Findings are statistically accurate to +/- 2.4 per cent 19 times in 20.
Read the June 2013 Business Barometer at www.cfib.ca/barometer.