MEDIA EMBARGO: Sept. 7, 2011; 6am EST
Business Barometer ®
TORONTO, Sept. 7, 2011 /CNW/ - Small business confidence took a
significant hit in August as owners digested a string of bad news about
world economy in the first half of the month. The Canadian Federation
of Independent Business (CFIB)'s Business Barometer Index dropped to
61.7 last month from its July level of 68.3—the lowest reading since
"These results are not altogether unsurprising," commented Ted Mallett,
vice-president and chief economist for CFIB. "The raucous debt ceiling
debate in the US and turmoil that followed in equity markets worldwide
rightly caused business owners to pay attention to their own planning.
But of note, although confidence suffered, owners' views of actual
current business conditions held up reasonably well."
The balance of opinion on how businesses are now doing compared to three
months ago is still trending upward. Although the perspective on the
next three months fell somewhat, the balance of opinion is still net
positive and in line with survey results this time last year.
Indications of the current state of business operations, such as new
orders, unsold inventories and use of staff overtime all regressed in
August, but mainly correcting for what had been very strong July
measures. Furthermore, they all remain well above what we had seen
during the 2009 recession and through its early stages of recovery.
"The drop in confidence is having a predictable impact on capital
spending intentions, as more business owners decide to postpone
investment decisions on vehicles, equipment and real estate," said
Mallet. "However, spending of this type generally has short lead-times
compared to capital investment in larger enterprises, so it would
respond positively and quickly in the event of signs of greater
economic stability," he concluded.
The largest index declines provincially speaking were in Ontario and
Quebec, dropping eight points and five points respectively to near the
60 mark. Alberta businesses remain the country's most optimistic, with
an index score of 75, Saskatchewan follows at 69.1, while British
Columbia, Manitoba and Newfoundland and Labrador are clustered around
the 65 level.
Measured on a scale between 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 75 when the
economy is growing. The August 2011 findings are based on 957
responses, collected from a stratified random sample of CFIB members,
to a controlled-access web survey. Findings are statistically accurate
to +/- 3.2 per cent 19 times in 20
As Canada's largest association of small- and medium-sized businesses,
CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes
direction from more than 108,000 members in every sector nationwide,
giving independent business a strong and influential voice at all
levels of government and helping to grow the economy.
SOURCE CANADIAN FEDERATION OF INDEPENDENT BUSINESS
For further information:
or to arrange an interview with Ted Mallett, contact Gisele Lumsden or Meghan Carrington at 416 222-8022 or email firstname.lastname@example.org