Small business confidence edges upward in first quarter, but half the provinces are below the national average

Toronto � March 29, 2006 – The latest Quarterly Business Barometer, by the Canadian Federation of Independent Business (CFIB), shows confidence within Canada�s small and mid-size business sector has edged up for the second consecutive quarter. The CFIB Quarterly Business Barometer Index now stands at 107.2 (1988=100), or 1 point higher than December�s level and four points above its September level. �This is still at the low end of average when you compare the levels recorded over the past four years, but it shows that the small- and medium-sized business economy is growing at a sustainable rate,� said CFIB�s chief economist, Ted Mallett.

Mallett said overall, about 35 per cent of owners say their firms are doing much better or slightly better than one year ago, while 27 per cent say they are doing somewhat or much worse. At the same time, about 41 per cent of respondents expect stronger performance during the next three months, while only 16 per cent expect a weakening. The longer-term expectations for the next 12 months are the most positive, with 49 per cent of respondents expecting stronger performance, versus only 16 per cent expecting a weaker year ahead.

Looking across the country, Mallett said businesses in British Columbia and Alberta continue to be the most optimistic, while those in Nova Scotia, New Brunswick and Prince Edward Island continue to show strong index growth. The small business sectors in all remaining provinces expect to perform below the national average, including Ontario and Manitoba, which show little change from their December levels. Businesses in Saskatchewan, Quebec and Newfoundland and Labrador are less optimistic about the year ahead than they were in December.

Mallett pointed out that the modest increase in overall small business expectation is balanced by a slight decrease in hiring expectations. Almost 31 per cent of business owners expect to increase full-time employment in the next 12 months�somewhat below the 33 per cent who had the same perspective last December, but still in the historically high range when compared to results from previous years.

When asked about factors affecting their businesses, Mallett said that concerns related to input prices continue to be stubbornly high among respondents. Energy prices are by far the biggest problem, cited by 82 per cent. High insurance premiums remain the second biggest factor affecting business performance, and despite high profit levels in the insurance sector, concerns are showing no sign of easing. Labour availability and wages also continue to negatively affect a significant number of businesses.

Interest rates have climbed since the beginning of March, and this is reflected by a higher number of business owners expressing concern about rising rates. For example, 44 per cent of respondents cited interest rate as worsening compared to 28 per cent last December.

The survey was conducted via fax and e-mail between March 6 and 17, 2006 and drew 2,240 responses. The national results are accurate to within +/- 2.1 percentage points, 19 times out of 20.

The full report is available on the CFIB web site at www.cfib.ca