CFIB: Small business confidence shows mild improvement in January
February 07, 2012
The Canadian economy continues to grow but at a more reserved pace than a year ago, according to the most recent Business Barometer Index from the Canadian Federation of Independent Business. The slowdown may be a result of heightened uncertainty stemming from the European debt crisis and tepid demand in the U.S.
The index climbed slightly in January to reach 65.2 points, higher than the 65 points noted in December but otherwise statistically insignificant. Analysts pointed to a continued East-West divide as contributing to the slowdown. Provinces in the East are showing reluctant business growth while all four Western provinces are well above average.
"The Index remains below what it had been at any point between January and July of 2011, revealing the economy is growing, but not at the pace we had seen at this point last year," said Ted Mallett, vice president and chief economist at the CFIB.
Weaker retail sales have also contributed to slower growth, with a lag from the holiday shopping season continuing into the new year. The hospitality and transportation sectors have also slowed.
The findings for January are, however, in somewhat of a contrast to conditions in the U.S., where recent reports have showed marked improvements in job creation, manufacturing and consumer activity. Accordingly, Canadian analysts hope that heightened demand from the country's largest trading partner will bolster small and large firms alike.
But beyond relying on help from the U.S., Canadian markets did show gains in some sectors, particularly in wholesale and factory production.
"There are signs of strength though, the natural resources sector including manufacturing and wholesale industries remain quite upbeat, with index levels approaching 70. And, finance, insurance and real estate industries also appear to have shaken off some of its earlier caution," Mallett added.
Like its neighbor to the south, Canada's leading problem is employment. While unemployment continues to decline, the pace of job creation remains slow. The most recent CFIB report shows just 16 percent of the country's small business owners plan to add full-time staff over the next three to four months, and roughly 12 percent plan to cut staff. However, analysts noted, the net 4 percent increase in employment is typical for this time of year.