Business Barometer®: Small business optimism muted in November

November 2015
Ted Mallett, Vice-President & Chief Economist

Small business optimism remained muted in November and showed little change from the previous month. The latest Business Barometer® Index reading was 58.7—only 0.2 points from October's 58.9, but below sentiment recorded in the first half of the year.

The national average continues to be weighed down by weak business sentiment in Alberta (37.4) and Saskatchewan (52.7), and to a lesser degree in Quebec (56.5). There were positive signs in British Columbia (66.6) and Ontario (63.0) as well as in Manitoba, which saw a jump in its index this month to 68.0. The results in the Atlantic Provinces are remaining more or less on trend, with Nova Scotia businesses (67.6), in particular, continuing with positive outlooks.

On a scale between 0 and 100, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. One normally sees an index level of between 65 and 70 when the economy is growing at its potential.

With a few exceptions, the sector profile is generally very tightly bunched. Most service sector businesses have index scores in the low 60s. Sentiment in agriculture, manufacturing and personal services businesses are a few degrees lower, while those in resources, construction and wholesale are the least optimistic.

Despite a slight improvement this month, employment plans are weaker compared to last year, with only 18 per cent of businesses planning to hire additional full-time staff in the next few months versus 15 per cent who plan to cut back. Average plans for wage increases have remained at 1.5 per cent, but pricing plans have settled somewhat at 1.9 percent--in part because of greater exchange rate stability lately. The good news is that concerns about weak customer demand seem to be easing somewhat and that focus is returning to issues around availability of skilled labour.

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