Business Barometer®: small biz confidence slips in April

April 2015
Ted Mallett, Vice-President & Chief Economist

Canada’s small business confidence levels slipped a little in April. The Business Barometer® Index fell back to 60.5 this month, a point lower than March’s already cool 61.5. Fallout from the shift in energy price fundamentals is still working its way through regional and sector economies.

Though modest, the easing of confidence was pretty broadly based, falling in 7 of 10 provinces. Business owners are least optimistic in Alberta and Saskatchewan, where index levels dropped to 47.0 and 50.0 respectively. Indexes also edged lower in Nova Scotia (63.3), Ontario (62.5), New Brunswick (60.7) and Quebec (57.3)—places that still appear slow to register much benefit from lower energy costs and the lower Dollar. Confidence, though, remained steady in Prince Edward Island (69.2) while rising in Manitoba (60.2) and British Columbia (71.5).

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.

There are other signs of coolness in the small business economy. Thirty-nine percent of business owners say their firms are in good shape, five points below levels of late last year. The state of new orders and account receivables has also slipped. Short term hiring plans, while generally higher during the spring, are not up to the levels we had seen in the past couple of years. And, although 30 per cent of business owners still say shortages of skilled labour are still problems, it’s the lowest we had seen in two years. 

Plans point to a 2.2 per cent increase in prices in the next 12 months—in line with the underlying inflation rate, but wages are much softer, with planned increases only averaging 1.5 per cent.

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