CFIB: Business confidence in Canada climbs in December despite overseas uncertainty
January 04, 2012
Canadian businesses were more confident in December, reflecting the uptick in consumer activity around the holidays and a general improvement in U.S. markets. The Canadian Federation of Independent Business reported Wednesday that its Business Barometer Index climbed to 65 last month, roughly a point and a half above November's reading.
Ted Mallett, vice president and chief economist for CFIB, pointed out that the index has historically been between 65 and 70 points during periods of economic recovery. The rise offers hope for a more robust recovery, but conditions overseas remain too uncertain to quell fears among Canadian consumers, investors and small business owners.
The services sector appeared the most optimistic last month, with its respective confidence index surpassing all others. Construction and manufacturing, among the most troubled industries since the recession began, continued a tepid improvement last month.
"Although less robust, business confidence in the construction and manufacturing sectors turned upward in December to 60.6 and 63.6 respectively," Mallet said in a statement. "Consumers, however, appeared to become more cautious in the month, sending the retail and hospitality sector indices down below 60."
"After increasing through the past few years, concerns about shortages of qualified labor have fallen back as of late," Mallett added.
On a provincial level, business owners in Alberta and Saskatchewan were the most confident, with respective index readings of 73.6 and 72.2.
"Confidence levels among entrepreneurs in Alberta are once again the highest in the country, which is obviously good news for our province’s economy," said Richard Truscott, CFIB's Alberta Director, according to the Calgary Herald. "However, there continues to be a noticeable east-west divide in confidence levels by province, something that should make policy-makers sit up and take note."
While Europe appears to be mired in a recession due to its ongoing debt crisis, conditions may be starting to improve in the U.S. A day before the CFIB report, Thomson Reuters and PayNet released a report showing the largest surge in small business lending since February 2008. Perhaps more importantly, analysts viewed that report as evidence U.S. markets are also moving to brace themselves against headwinds from the European debt crisis.