Small-business confidence at a three-year low

Aug. 2, 2012, Canada – Optimism among Canada's small- and
medium-sized businesses continued to decline in July, according to the
Canadian Federation of Independent Business (CFIB).

Aug. 2, 2012, Canada – Optimism among Canada's small- and
medium-sized businesses continued to decline in July, according to the
Canadian Federation of Independent Business (CFIB). The Business
Barometer index dropped from 62.1 in June to 60.9, its lowest reading
since July, 2009.

"The major difference between now and two years ago was that the index
was trending in the opposite direction, towards greater confidence,"
said Ted Mallett, CFIB's chief economist and vice-president. "The
index's current position against GDP puts it very close to the
zero-growth mark, suggesting Canada's economy is nearing a standstill."

Business owners in Saskatchewan (72.0) and Alberta (70.3) are the most
optimistic, although only Newfoundland and Labrador (63.3) experienced
an increase from June as index levels fell in every other province. New
Brunswick (64.8) and Manitoba (64.5) are above the national average,
while the three biggest provinces, British Columbia (60.5), Ontario
(60.1) and Quebec (58.1) are slightly below. Index levels in Nova
Scotia (54.0) and Prince Edward Island (52.7) are the country's lowest.

"Retailer optimism took a big tumble in July and has joined the
hospitality and personal services sectors in the sub-60 club – suggesting
that consumers are getting cautious with their spending," added
Mallett.

The one bit of good news is a rebound of hiring expectations: 20 per
cent of business owners plan to hire full-time staff in the next three
or four months (up from 15 per cent in June) compared to 12.8 per cent
who say they will cut back (up from 12 per cent). This is a strong
reading for the middle of summer. Overall, 42 per cent of business
owners described their state of business to be in "good" shape, nearly
three-times the 13 per cent who said their state of business is "bad."

Measured on a scale of 0 and 100, an index level above 50 means owners
expecting their businesses' performance to be stronger in the next year
outnumber those expecting weaker performance. According to past
results, index levels normally range between 65 and 70 when the economy
is growing at its potential. The July 2012 findings are based on 839
responses, collected from a stratified random sample of CFIB members,
to a controlled-access web survey. Findings are statistically accurate
to +/- 3.4 per cent 19 times in 20.