Media Release

First of six weekly Business Barometer^® updates by CFIB:
Small firms more pessimistic; pockets of strength remain
October 9, 2008

Toronto – As turmoil in the investment banking sector in the global economy spreads, pessimism is growing among small business owners in this country, according to results from a survey conducted this week by the Canadian Federation of Independent Business (CFIB). Results show the Business Barometer index falling considerably in only a few short weeks – to 91.0 in the first week of October from 101.8 in CFIB’s quarterly survey conducted during early September. The index still remains measurably above its record low of 85.0 taken in mid 1990, but below the 95.4 recorded in October, 2001.

CFIB’s chief economist Ted Mallett said that although the balance of opinion has become more negative, pockets of strength remain. He pointed out that five per cent of business owners are looking to perform ‘much stronger’ in the next 12 months, while 23 per cent are expecting to be ‘somewhat stronger’. Mallett said only six per cent expect to be ‘much weaker’ in 12 months, with 31 per cent of business owners expecting to be ‘somewhat weaker’.

Mallett also said the survey results indicate that employment markets appear to be reasonably stable for now, with 26 per cent anticipating adding to full-time hiring levels in the next 12 months, while 17 per cent are planning to cut back. These are weaker numbers than traditionally found among employers from this survey, said Mallett, but he added that they appear to reflect the importance small business owners place on maintaining skill sets and experience within their workforces. “Cutting back on employment is typically a last resort measure among small business owners,” Mallett explained. He also pointed out that credit concerns appear to have accelerated since early September and the number of businesses reporting problems accessing bank financing has risen to 25 per cent in early October, up from 18 per cent only one month earlier.

It should be noted that these perspectives do not yet represent firm plans by small business owners said Mallett. He added that developments in financial and commodity markets are still too volatile and uncertain to allow business owners to plan effectively. “Growth may be paused for the moment, but longer term performance of small- and mid-sized enterprises will depend on how markets settle out over the next few weeks,” said Mallett.

This special Barometer series is meant to fill the information vacuum for business owners and policymakers looking for guidance. Usually conducted quarterly, CFIB is running the Barometer survey on a weekly basis for six weeks, having begun on October 6. These findings are based on the responses of 809 business owners surveyed between October 6 and 8, 2008. The survey was sent to 8,000 randomly selected CFIB members on October 6, and conducted via a secure web interface. Results can be considered accurate to within ±/- 3.4 percentage points 19 times out of 20.

The next survey will be sent to a new list of 8,000 members on October 14, and results will be released on October 16, 2008. Further details are available at www.cfib.ca.

For more information, contact Gisele Lumsden at 416-222-8022 or one of our provincial offices.

Business Barometer is a publication of the Canadian Federation of Independent Business and is a registered trademar