Business Barometer®: National small business confidence up for second straight month
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March 2010
Ted Mallett, Vice-President Research & Chief Economist
Small- and mid-size business confidence is gaining strength again. After slumping in late 2009, optimism among business owners has now grown for two consecutive months—the first time it has done so since the previous summer. CFIB’s Business Barometer® Index has increased to 68.5 in February, from 66.9 a month earlier. The index level is back to its previous cyclical peak reached last September and also to its 2002-2007 historical average. The February results correspond to roughly 3 per cent real GDP growth.
CFIB Business Barometer Index and GDP
Measured on a scale between 0 and 100, an index level above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. According to past results, index levels normally range between 65 and 75 when the economy is growing.
Confidence improved in 10 of 13 industry categories. Wholesalers and retailers are leading the way with Index levels of 72.5 and 71.6 respectively. Optimism has also recovered smartly among construction and manufacturing businesses, beating even the business and professional services sectors which are usually the most upbeat. Relative weakness, however, continues to be seen among owners of businesses in the hospitality, natural resources and agriculture sectors—each with Index levels below 60. Changes in business optimism across the regions are a little more balanced, with only 5-in-10 provinces showing improvements. Business owners in Nova Scotia and Saskatchewan get the gold and silver medals for optimism, with index scores of 72.5 and 71.5 respectively. Most notably, however, Quebec SMEs narrowly beat out those in Ontario for the third-place bronze position—the first time since September 2004 that their confidence indexes have both been above the national average.
