Canadian business confidence remains relatively low
December 07, 2011
Reflecting ongoing economic uncertainty in the U.S. and Europe, optimism among Canadian small businesses was showed little changed in November, stirring fears of the euro zone debt crisis findings its way into global markets.
The Canadian Federation of Independent Business reported this week that its Business Barometer index climbed mildly to 63.7, up from October's other unenthusiastic reading of 63.6.
"This level is still lower than normal, however, as overhanging concerns about the potential spread of economic weakness out of Europe appear to be still at play," said Ted Mallett, vice president and chief economist at the CFIB.
"The Index has recovered 2.0 of the 6.6 points lost in August when the Euro currency and U.S. fiscal policy crises hit world financial markets, suggesting the Canadian economy is performing at a slower pace, but has not dipped into recession," Mallett added.
Similar sentiment was noted in the U.S. last week, as the country's Labor Department reported a considerable dip in unemployment to 8.6 percent, down from 9 percent in October. While the figures were enough to stem fears of a double-dip recession in the fourth quarter, they were marred by the fact that some 315,000 Americans simply stopped looking for work in November.
In Canada, the labor force, although relatively stronger than that of its neighbor to the south, is reliant on industries that have suffered greatly from the global recession: manufacturing, construction and transportation.
"Although we have been seeing generally positive trends, November inventory levels, overtime hours and accounts receivable measures all stepped back slightly from October levels," Mallett said.
U.S. manufacturing took a strong upward swing in November, according to reports from the Commerce Department and the Institute for Supply Management.
Small business owners in the province of Saskatchewan appear the most optimistic, with an index level slightly higher than 74. Alberta, British Columbia and Manitoba also showed above-average readings, while New Brunswick, Ontario and Nova Scotia all fell below the 60 point mark.
"The fact that optimism is holding steady rather than waning in such an uncertain environment is good news," Dina Cover, economist at TD Economics, told the Calgary Herald. "But with a resolution to Europe's problems still a ways away, and the U.S. facing its own fiscal challenges, business confidence in Canada is likely to remain sub-par through the first half of 2012."