Media Release
Update 3: Business Barometer for week of October 20:Optimism slides back; employment expectations weaken
October 23, 2008
Toronto – Small business optimism dropped back this week and employment plans were scaled down, as stock market uncertainty gave way to wider concerns about economic prospects, according to results from the third straight week of surveying by the Canadian Federation of Independent Business (CFIB). Results show the Business Barometer index falling back to 91.1 from last week’s 94.4 and to roughly the same level where it stood two weeks ago. The index continues to remain well below its historical norms but above its record low from mid-1990.
Ted Mallett, CFIB’s chief economist said only 23 per cent of owners expect to be adding to full-time employment levels in the next 12 months, while 17 per cent report intentions to cut back. He pointed out these are weaker than the readings of last week that saw 25 per cent expecting to take on full-time staff and 15 per cent looking to make cutbacks.
On a brighter note, Mallett said the credit concerns appear to be stabilizing as the number of businesses reporting problems accessing bank financing has been held to 27 per cent during the week, slightly down from 28 per cent the previous week.
Although the balance of opinion continues to be cautious, pockets of strength are still holding steady, said Mallett, as three per cent of business owners are looking to perform ‘much stronger’ in the next 12 months, while 27 per cent are expecting to be ‘somewhat stronger’. Mallett said only six per cent expect to be ‘much weaker’ in 12 months, with 32 per cent of business owners expecting to be ‘somewhat weaker’.
Mallett pointed out that during a week when Small Business Week is being celebrated throughout the country, these survey results underline once again how much our country’s entrepreneurs bring stability and hope during a time when much of the world has been seized by economic panic and despair. “We are not seeing extreme swings in attitudes driven by stock market mania,” said Mallett. “Small business people are resilient, not frivolously frightened and by their very nature extremely optimistic.”
It should be noted that these perspectives do not yet represent firm plans by small business owners said Mallett, adding that developments in financial and commodity markets are still too volatile and uncertain to allow business owners to plan effectively. He further stated that 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.
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 653 business owners surveyed between October 20 and 21, 2008. The survey was sent to 8,000 randomly selected CFIB members on October 20, and conducted via a secure web interface. Results can be considered accurate to within ±/- 3.8 percentage points 19 times out of 20. The next survey will be sent to a new list of 8,000 members on October 27, and results will be released on October 30, 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.