Canadian Pizza Magazine

National small business optimism near record low

By CNW Group   


Dec. 17, 2008, Toronto – Overall expectations among the
owners of Canada's small and mid-sized enterprises has fallen to a near record low
of 86.1 in December, according to findings from the latest survey of business
optimism released today by the Canadian Federation of Independent Business

Nationally, latest expectations push the December Business Barometer
index down from its previous cyclical low of 90.3 in October and early November
and further from a high of 101.8 in September.

"Today's conditions will almost certainly put Canada's
GDP in reverse in the fourth quarter," said CFIB's chief economist Ted
Mallett, adding "the decline could carry well into the New Year."


In this quarter, findings show results by the provinces
differ very little, with optimism falling in every region. The most optimistic
businesses reside in Saskatchewan, where the index barely tops the 100 mark.
Next in line are businesses in New Brunswick and Newfoundland and Labrador. British
Columbia, which only two years ago had the most optimistic small business sector,
now has the least, dropping to an index level of only 82.9 and just under
Ontario's 83.0. Alberta's small business owners are also registering an index
level of only 84.3. All other provinces are registering around the weak national
average in the high 80s or low 90s.

From commodities to industrial products, the sentiment
remains negative across the board. With index levels well below the September
numbers, businesses in the health and education sectors, business services,
finance and even hospitality show only a faint increase in December optimism
from levels of a few weeks earlier. The most negative news, however, is
optimism in the manufacturing sector, dropping to even lower depths with an
index level below 80, with wholesale and construction sectors not far behind. The
service sector, traditionally the economy's fastest growing and the most
insulated from economic swings, shows the only sign of gain.

Retail performance this holiday season is turning out to be
poor by historical averages. With only 5 per cent of small business retailers
saying they are performing much better than a year ago, and almost three-times
as many doing significantly and measurably worse. Almost one-quarter of retail respondents
say they are performing somewhat stronger and about a third are doing somewhat
worse. The remaining 27 per cent have seen no significant change in their
performance compared to last year.

Although pressures on the cost of product inputs and energy
have eased in recent months, they still exert pressure on about half of all
businesses that are unable to lessen their load on their cost structures. More
than half of all business owners now say the overall investment climate has
deteriorated for their companies, compared to three months ago.

The price outlook has also eased off considerably.
Inflationary pressures are now far lighter than they had been in September.
Much of the price pressure however remains driven by exchange rates. The rapid
and unanticipated decline of the Canadian dollar relative to is U.S.
counterpart has pushed up the price of products imported from the U.S. In a
reversal of traditional findings, a higher percentage of business owners – 36
per cent – want a higher Canadian Dollar compared to those who would like to
see it decline further -25 per cent.

Signs of an economic slowdown are present everywhere in the
economy. But, Canada's entrepreneurial strength saved our economy from the
previous recession in 2000-01 when the tech bubble burst in the U.S. And, with
time and good fiscal management by governments to allow markets to work
effectively, one can expect the small business sector to play a major role to
pull the economy out of its current state.

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