Gateway Gazette

Big drop in Alberta small business confidence in December

 

Barometer index declines 7.4 points, biggest single monthly drop in over five years

CALGARY, December 30, 2014 – According to the latest Business Barometer survey results released by the Canadian Federation of Independent Business (CFIB) today, Alberta’s small business confidence index dropped by more than seven points in December to 66.2, the largest monthly decline in over five years.

“There has clearly been a significant change in the rosy outlook of many of Alberta’s entrepreneurs. After reaching its highest point in two and a half years in October, the confidence index took a big hit in December,” says Richard Truscott, Alberta Director for CFIB.

Much of the decline in optimism among entrepreneurs in Alberta is likely related to oil prices. Business owners understand how important the oil and gas industry is to the overall health of the economy and their business.

A survey conducted by the CFIB in August 2014 found that 49 per cent of respondents believed the health of the oil and gas sector was “very important” to the success of their business, while 40 per cent said it was “somewhat important.” Only 10 per cent of entrepreneurs said the industry’s health was not important to their business.

“Thankfully, the December Business Barometer numbers are not all bad news. For the most part, the other indicators for Alberta have stayed solid, which shows the province’s entrepreneurs believe the outlook for the economy remains relatively strong, at least for now”, remarked Truscott.

When asked to describe the general health of their business, 54 per cent in December said it was “good”, only one point lower than the previous month, while 9 per cent described it as “bad”, the same as November.

Hiring expectations also remained strong. Thirty-one per cent of entrepreneurs in December said they planned to add full-time staff over the next three months, same as November, while ten per cent expected a reduction, up just one point.

There was some change in December to entrepreneurs’ views about their biggest limitations on sales and production. Forty-eight per cent the business owners surveyed identified the shortage of skilled labour, down five points from November. The shortage of people for lower-skilled jobs is now the next highest constraint at 39 per cent, up four points over the previous month.

When asked to identify the biggest cost issues for their business, 57 per cent of entrepreneurs in December said wage costs, four points lower than November, but still 11 points higher than any other issue, such as taxes, fuel and energy, or insurance.

The national Business Barometer index dropped four points in December to 61.9. The provincial indices from best to worst were: British Columbia (72.4), Alberta (66.2), PEI (65.8), New Brunswick (65.4), Ontario (64.1), Newfoundland (63.9), Nova Scotia (59.7), Manitoba (59.6), Quebec (58.2), and Saskatchewan (56.0).

About the Business Barometer: 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. An index level of between 65 and 75 means the economy is growing at its potential. The December 2014 findings are based on 944 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Findings are statistically accurate to +/- 3.2 per cent 19 times in 20. More details about the Business Barometer are available at http://www.cfib.ca.

About CFIB: As Canada’s largest association of small and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 109,000 members in every sector nationwide, including 10,000 in Alberta, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.

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