The U.S. economy has presented one of the biggest small business challenges for firms the world over in the past few years. The most recent measure of small business confidence in Canada seems to indicate that this is still the case.
The Canadian Federation of Independent Business (CFIB) reports that confidence among the country's small and medium-sized businesses continued to fall in June. The Business Barometer index dropped from 64.8 in May to 62.1 in June. In total, it is down 5.6 points from its peak in March 2012. The barometer is now back to levels of late-summer 2011, when debt concerns in Europe and the US had suddenly flared up.
The CFIB explains that confidence is measured monthly on a scale of zero and 100. An index that is more than 50 indicates owners expect their business performance to be stronger in the next year, rather than weaker.
"The weight of concern over the prospects for world economies continues to push business confidence down in Canada," said Ted Mallett, CFIB's chief economist and vice president. "If there is any good news, it is that our numbers suggest the economy is still growing, albeit at a slow pace."
The index, which was calculated based on the responses of nearly 750 business owners, found that those in some areas of the country were more optimistic than others. Business owners in Alberta and Saskatchewan have had the most optimistic outlook for the past 11 months. Those in Ontario, Quebec, Prince Edward Island and Nova Scotia were the least optimistic.
"Insufficient customer demand was the most commonly cited constraint on business performance, although concerns about customer demand have gradually trended downward in 2012," said Mallett. "Meanwhile, concerns over shortages of working capital have increased slightly through the year, and about one business in four appears to have significant difficulties in finding necessary credit."
Lower confidence may affect hiring going forward, as just 15 percent of business owners said they expect to increase full-time staffing levels in the next three to four months, compared to 21 percent who said the same in May. In addition, 12 percent indicated they would "cut back" in coming months, compared to 10 percent in May.
Regardless, 40 percent of business owners surveyed described their state of business to be in "good" shape. Just 12 percent reported the state of their business as "bad."