Small biz optimism improves but hiring plans hit record low

Recently, the Canadian Federation of Independent Business (CFIB) released its latest monthly Business Barometer®, which reveals optimism among small business owners in Saskatchewan improved in August to an index of 54.9, up 3.8 points from 51.1 in July. This index remains below the national average index of 59.8, and is 7 points below August of last year (61.9).

“August brought back some measure of Saskatchewan’s small business optimism, with an index of  54.9, an average reading for 2016,” said Marilyn Braun-Pollon, CFIB’s Vice-President, Prairie & Agri-business. “Hiring plans, however, are negative with only six per cent of business owners looking to hire full-time - a record low reading in the province. Another 11 per cent plan to reduce staff. The general state of business health has also seen a small drop with only 38 per cent of entrepreneurs saying their business is in good shape, while 15 per cent say it is poor.”

Canada’s small business optimism took a bounce back upward in August. CFIB’s Business Barometer Index erased a weak July reading, rising more than two points to 59.8 — almost the same as its June level and the second-highest monthly mark registered since May of 2015. Sentiment still has plenty of room to improve though, with the index running five points under its 2010-14 averages.

“There were notable gains in five provinces and dips in the five others,” said Ted Mallett, CFIB chief economist. “The good news is that the declines in four of the five other provinces were very slight, about a point or less. The exception was Newfoundland & Labrador, which plunged by more than 10 points from July’s index.”

Improvements were widespread across the provinces — rising in five, including Prince Edward Island (70.5), Quebec (64.9), Ontario (62.6), Nova Scotia (62.3) and Saskatchewan (54.9). Of the provinces that saw index declines, four of five were very slight — about a point or less in each case: British Columbia (65.6), New Brunswick (63.0), Manitoba (56.1) and Alberta (45.6). The steepest drop off in optimism, however, was in Newfoundland and Labrador (37.8). Results and the full report are available at: www.cfib-fcei.ca/english/barometer

Highlights of the Saskatchewan Business Barometer for August:

• 38% of businesses in Saskatchewan say their overall state of business is good (40% nationally); 15% say it is bad (15% nationally).

• 6% of Saskatchewan businesses plan to increase full-time employment in the next 3-4 months (19% nationally) and 11% plan to decrease employment (13% nationally).

• Insufficient domestic demand remains the main operating challenge (52%), followed by management skills/time constraints (31%).

• Major cost pressures for small business include: tax, regulatory costs (47%); wage costs (46%); insurance costs (39%); and bank account and processing fees (36%).

Measured on a scale of 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. According to past results, index levels normally range between 65 and 70 when the economy is growing at its potential. August 2016 findings are based on 603 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received through August 14. Findings are statistically accurate to +/- 4.0 per cent 19 times in 20.