Media Release
Update 4: Business Barometer for week of October 27:Optimism dims; shifts in commodity prices, exchange rates tear through economy
October 30, 2008
Toronto – Small business optimism has dimmed further as massive shifts in commodity prices and exchange rates begin to tear through the economy, according to findings from the fourth straight week of surveying by the Canadian Federation of Independent Business (CFIB). Results now show the Business Barometer index retreating sharply to 85.4, from last week’s 90.9, said CFIB chief economist Ted Mallett, who pointed out “there is no doubt the continuing bad news in international markets has seriously dented small business operating plans.”
Employment markets are slightly weaker as well, with only 20 per cent of owners expecting to add to full-time employment levels in the next 12 months, and 19 per cent report intentions to cut back. Mallett said these are also weaker readings from last week that saw 23 per cent expecting to take on full-time staff and 16 per cent looking to make cutbacks.
The survey results show there is still a full range of expectations among business owners, as only four per cent of small firms are looking to perform ‘much stronger’ in the next 12 months, while 19 per cent are expecting to be ‘somewhat stronger’. Mallett added that eight per cent now anticipate being ‘much weaker’ in 12 months, while 39 per cent expect to be ‘somewhat weaker’.
On the important matter of credit availability, the survey shows mixed results. Mallett said that on the one hand despite the scaled down outlook compared to last week, credit concerns appear to have stabilized as the number of businesses reporting problems accessing bank financing has been held to 25 per cent during the week. But he said this news is somewhat dampened by the number of business owners reporting improvements in the availability of credit has nearly disappeared.
Mallett said it should be noted these perspectives do not yet represent firm plans by small business owners in that developments in financial and commodity markets are still too volatile and uncertain to allow them 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 and months.
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 806 business owners surveyed between October 27 and 28, 2008. The survey was sent to 8,000 randomly selected CFIB members on October 27, and conducted via a secure web interface. Results can be considered accurate to within ±/- 3.5 percentage points 19 times out of 20. The next survey will be sent to a new list of 8,000 members on November 3, and results will be released on November 6, 2008. Further details are available at www.cfib.ca.
For more information, contact Gisele Lumsden or Meghan Carrington at 416-222-8022 or one of our provincial offices.