By Ted Mallett
(TORONTO, ON) – Small business optimism chilled noticeably in February. CFIB’s Business Barometer® Index dropped more than four points to 59.1—the lowest level we’ve seen since mid-2009.
Weak energy prices continued to deflate business optimism in Alberta (48.2), Saskatchewan (53.0) and Newfoundland and Labrador (56.2). Sentiment was carried lower in Ontario (60.0) and Manitoba (54.5) as well, suggesting that falling fuel prices and lower Dollar are not yet providing a meaningful pick-me-up for those economies. Improvements in business outlooks, however, are being seen in the Maritimes–which along with continued resilience in BC (69.1) have become the most optimistic regions in the country.
Among industry groups, only the information and financial sectors are in healthy territory. Optimism declined in 9 of 13 sectors this month, including manufacturing and retail.
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.
We are seeing foundation cracks in a number of other indicators as well. Though still net-positive, full-time hiring plans are well under what they had been in past winters. Wage plans are down, while pricing plans are higher–likely a result of costlier imports. Operating concerns such as weaker customer demand, skilled labour availability and working capital shortages are also spiking upward.
Ted Mallett is Vice-President and Chief Economist of the Canadian Federation of Independent Business