Small business optimism took a dip in December
Jan. 6, 2014, Canada – After a period of relative smoothness through the summer and fall, small business optimism dropped off substantially in December 2013, found the Canadian Federation of Independent Business's business barometer index.
The index fell more than three and half points to 62.3, its lowest level since June of last year.
On a scale between 0 and 100, an index above 50 means the number of owners who expect business performance to be stronger in the next year outnumber those expecting a weaker performance. One normally sees an index level of between 65 and 70 when the economy is growing at its potential.
There is not much variation by sector, but retail showed a bigger-than-average drop in optimism, with its index falling almost seven points to 60. However, other indicators from the survey remain relatively steady. Employment plans are basically unchanged, with 18 per cent expecting to add full-timers in the next few months, versus 12 per cent who plan to cut numbers.
Capital spending plans are also steady, although new orders and accounts receivables turned slightly negative last month. Of note, 64 per cent of business owners reported concerns about tax and regulation levels in December. This trend has been higher in 2013 after averaging 57 per cent in 2012.
Optimism fell in seven of 10 provinces. The exceptions are B.C., now with the nation's most upbeat business sentiment with an index of 72.6, as well as less-upbeat Prince Edward Island (58.3) and New Brunswick (56.7).
The biggest declines were seen in Quebec, which is now least optimistic among the provinces at 53.8. Nova Scotia dropped to 58.3, Ontario sat at 62.9 and Manitoba at 63.4. Newfoundland and Labrador (68.1) also saw a downward correction, but back to levels typical of the first half of the year. Not much change in business sentiment was noted in Alberta and Saskatchewan, where index levels still hover near 70.