Business sentiment blooms as spring breaks in Alberta, BSI survey shows

EDMONTON, March 18 /CNW/ - Alberta businesses have emerged from the dark days of winter and are looking forward to spring with a sunny optimism not seen since late 2007, according to the latest ATB Financial Business Sentiments Index(TM) (BSI).

The BSI surveys companies throughout Alberta to gauge their opinion and sentiment for the coming quarter. Expectations for the second quarter of 2010 rose to 141.8, after first-quarter 2010 sentiment stood at 128.6. A year ago, the sentiment index hit its lowest point in recent years, at 99.5. (An index value more than 100 indicates optimism, and less than 100 indicates pessimism.)

"It's quite remarkable," said Todd Hirsch, ATB's Senior Economist. "For months, we've been hearing that business is up and that demand is gradually coming back, but there was always a sense of hesitancy - perhaps an unwillingness to believe that things were improving. But finally, firms seem to be willing to believe Alberta's strong economy is returning."

The BSI, a joint effort of ATB and the Western Centre for Economic Research at the University of Alberta School of Business, surveyed more than 400 companies in the province between February 22 and March 5.

The sentiments index is up in four sectors: manufacturing, professional/technical, wholesale, and oil and gas. "Given that the survey was conducted prior to the release of the new energy royalty framework, it's fair to say that optimism is even higher today in the oil and gas sector," Hirsch said.

Firms in two sectors - transportation/warehousing, and construction - expressed lower sentiment than the previous quarter. Sentiment in the construction sector has remained below the neutral 100 mark for seven consecutive quarters, and remains the only sector of six with a pessimistic outlook.

The current glut of commercial office space in Calgary has taken the steam out of major commercial construction projects, Hirsch said, noting also that with interest rates set to rise later this year, Alberta's residential builders may be bracing for a bit of a slowdown.

The complete report - available at www.business.ualberta.ca/wcer - also tracks activity and hiring indexes, both of which improved in the most recent survey. Ted Chambers, a research professor at the Centre, sees the results as positive.

"The survey results provide confirming evidence that Alberta has come through a difficult period and economic recovery is underway," Chambers said. "They suggest also that employment opportunities should improve over the rest of 2010."

The survey also measures businesses' medium-term expectations. This quarter's BSI suggests that more than three-quarters of Alberta businesses expect activity to grow over the next 12 months. Some 45 per cent expect activity to increase by more than 10 per cent, while 31 per cent expect it to increase by less than 10 per cent. Some 20 per cent expect outputs to remain stable, while only 4 per cent expect them to drop.

About ATB Financial - ATB Financial is the largest Alberta-based financial institution, with assets of $26.2 billion. It provides Personal and Business Financial Services, Investor Services, and Corporate Financial Services to more than 690,000 Albertans in 243 communities. It provides service through 165 branches and 131 agencies, telephone and Internet banking, a Customer Contact Centre, and Automated Banking Machines. ATB Financial was established in 1938 and has been a provincial Crown corporation since 1997. ATB has also been named one of Canada's 50 Best Employers by Report on Business Magazine, one of the 75 Best Workplaces in Canada by the Great Place to Work Institute, and one of Canada's Top 100 Employers and Alberta's Top 50 Employers by Mediacorp Canada Inc.

About the Western Centre for Economic Research - The WCER is an applied research centre within the University of Alberta School of Business. The centre monitors the performance of Western Canada's economy, its policies and programs, and implications for business enterprises. Drawing on a wide range of expertise, recent work of the WCER has included analyses of the Alberta resource economy, Western Canadian international trade, the effects of free trade agreements, barriers to trade and the role of small business in the West.

For further information: Todd Hirsch, Senior Economist, ATB Financial, [phone], e-mail: [email protected]; Ted Chambers, Research Professor, Western Centre for Economic Research, School of Business, University of Alberta, [phone], e-mail: [email protected]