TORONTO, Dec. 30, 2014 /CNW/ - Small business confidence took a big hit in December, with entrepreneurs in oil producing regions clearly worried about the plummeting price of oil, according to the Canadian Federation of Independent Business (CFIB). At the same time, business owners in Central Canada are not yet banking on lower energy prices to lift their outlooks. December's Business Barometer® reading fell sharply (4 points) to 61.9.
"Today's results are all about oil," said Ted Mallett, CFIB's chief economist and vice-president. "Small business owners in oil producing regions are understandably concerned about where and when the price of oil is going to bottom out, but all the fundamentals are still sound. Employment plans and the number of owners who report their businesses to be in good shape remain steady."
Measured on a scale of 0 to 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.
Optimism fell in 8 out of 10 provinces in December, led, as you would expect, by 6.5-point declines in Alberta (to 66.2) and Saskatchewan (to 56.0). Newfoundland and Labrador, Canada's other big oil producer, saw a 3-point drop (63.9). Manitoba business owners also posted a sizable four-point slide in optimism to 59.6, while in the top three oil consuming provinces, Ontario (64.1), Quebec (58.2) and British Columbia (72.4), the slippage was less pronounced, between one and two points from November levels. Only Prince Edward Island and New Brunswick (both now above 65) saw business sentiment improve.
The sectoral breakdown tells a similar story. There was a small upward bump in sentiment from manufacturers and construction businesses in December, but that was not enough to offset negativity in retail, farming and resource-based businesses.
"The price of oil is one of many drivers in our economy," added Mallett. "And it would be a mistake to draw long-term conclusions during a time when the price is so volatile. The only advice I can safely give is to go fill up."
December 2014 findings are based on 944 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received through December 15. Findings are considered accurate to +/- 3.2 per cent 19 times in 20.
Read the December Business Barometer®.
CFIB is Canada's largest association of small and medium-sized businesses with 109,000 members across every sector and region.
SOURCE: Canadian Federation of Independent Business
For further information: or to arrange an interview with Ted Mallett, contact Gisele Lumsden at 647 808-5769 (cell) or [email protected]