Quarterly Business Barometer - Small business confidence rises modestly in third quarter, 2007

    TORONTO, Sept. 26 /CNW/ - The latest Business Barometer by the Canadian
Federation of Independent Business (CFIB) shows a modest increase in business
confidence during the last fiscal quarter. Nationally, the index stands at
108.4, compared to 107.3 in June, although there are regional variations.
    "The national average has been extremely stable over the past two years,"
CFIB's chief economist, Ted Mallett said. "On average, business confidence
does not seem to be affected by the most recent rise in the Canadian dollar,
but we are seeing a definite slide in areas, such as manufacturing, that are
affected by exchange rates."
    Nationally, about 44 per cent of owners say their firms are doing "much
better" or "somewhat better" than one year ago, while 23 per cent say they are
doing somewhat or much worse. At the same time, about 41 per cent of
respondents expect stronger performance during the next three months and 51
per cent expect more strength in the next 12 months. Both measures are
slightly ahead of the previous quarterly survey.
    Mallett said although the September national index level does not show
much difference compared to June, the component regional indexes have shifted
quite a bit. Businesses in Saskatchewan are now the most optimistic in the
country, with an index of 115.3-a dramatic reversal from their bottom position
just three years ago. British Columbia is almost as optimistic, registering a
slight gain in their index to 114.9. The index levels in New Brunswick, Nova
Scotia and Newfoundland and Labrador have also posted healthy gains and are
all near the 109.5 mark. On the other hand, businesses in Alberta and Manitoba
are less optimistic than in late spring/early summer. The businesses least
likely to be optimistic continue to be those in central industrial regions of
the country-with the Ontario index at 106.9 and the Quebec index at 104.7.
    Mallett noted sharp contrasts in business optimism by sector. On the
upside, the economy continues to be powered by the services and consumer
sectors, showing index levels above the national average. Conversely, the
goods-producing sector is weaker, although not by any means near any record
lows. Optimism among transportation and manufacturing firms has trended
downwards over the past number of years, a result of exchange rates and energy
price pressures. Construction and wholesale business optimism has largely held
steady, while agri-businesses are showing an unsteady, but gradual trend
    When asked about factors affecting their companies, business owners
continue to report healthy levels of demand overall, particularly
agri-businesses, construction firms and business services professionals. On
the other hand, manufacturers and those in the hospitality sector are most
likely to be reporting worsening demand conditions, with many businesses
reporting various factors that continue to present challenges, including:
energy costs, input costs and the shortage of qualified labour.
    Employment expectations remain reasonably upbeat, according to Mallett,
with almost 32 per cent of business owners expected to increase full-time
employment in the next 12 months-that is up slightly from 30 per cent in June.
    "A strong consumer sector and healthy performance in the broad services
sector have kept SMEs with positive future expectations, despite a volatile
couple of months in the US financial markets, worldwide oil markets and
Canadian currency markets. An element to watch closely, however, is credit
availability. So far it does not appear to be the case among businesses in
Canada, with 12 per cent of business owners reporting that credit is more
difficult to obtain than a year ago, while about eight per cent saying
availability has improved-only a slightly more negative picture than given in
June," Mallett concluded. "On the positive side, businesses seem to be
responding to price and labour market pressures by focussing on capital
investment-the benefits of which will hopefully strengthen the longer term
prospects for the economy."

    The survey was conducted via fax and e-mail between September 6 and 14,
    2007 and drew 1,657 responses.

    The full report is available on the CFIB web site at www.cfib.ca

    Business Barometer is a quarterly publication of the Canadian Federation
    of Independent Business and is a registered trademark.

For further information:

For further information: Contact Judy Langford or Gisele Lumsden at
(416) 222-8022

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