Economists may be saying Alberta’s road to economic recovery is underway but the province’s business owners are singing a different tune.
Small business confidence in Alberta is plummeting.
The latest Business Barometer index by the Canadian Federation of Independent Business fell by another 7.6 points in Alberta in January to 37.5 points, the weakest result since late 2016.
Small business confidence has now dropped 16.3 points over the past two months, following the previous 8.7 point drop in December. And small business confidence in the province is by far the lowest in the country.
The index is measured on a scale of zero to 100. A level between 65 and 75 normally indicates that the economy is growing at its potential and a majority of owners expect their business’s performance to be stronger in the next year.
“Considering small business confidence is typically a harbinger of what is happening more broadly in the economy, it is especially worrisome,” said Richard Truscott, vice-president of B.C. and Alberta for the CFIB.
“Weak market demand coupled with rising taxes, higher energy costs, the $15 minimum wage, and a long list of new prescriptive occupational and employment regulations are weighing heavily on Alberta’s small business, and may signal more difficult times ahead for our province.”
The CFIB said the proportion of entrepreneurs who describe the state of their business as good fell to just 15 per cent in January (down six points). This compares to 55 per cent who say it is satisfactory (up five points), and 31 per cent who characterize it as bad (up two points).
“Taxes and regulatory costs are proving to be the biggest cost constraint, identified by 77 per cent of business owners, followed by fuel and energy costs (69 per cent) and wage costs (64 per cent),” said the CFIB.
“Hiring intentions have also worsened significantly in January, with 35 per cent of business owners now expecting to cut back on full-time staff over the next three to four months (up six points from December), compared to only nine per cent who expect to hire new employees.”
Here are the index figures for the provinces: Prince Edward Island (69.2), Quebec (63.5), Nova Scotia (63.1), New Brunswick (61.3), Ontario (60.4), British Columbia (57.3), Manitoba (56.3), Saskatchewan (55.2), Newfoundland and Labrador (47.9), and Alberta (37.5).
Rishi Sondhi, economist with TD Economics, said confidence in Alberta plunged in January despite sharply higher West Canada Select oil prices.
“And, with oil production set to remain subdued this year, it could be some time before confidence recovers meaningfully in the province,” he said.
– Mario Toneguzzi for Calgary’s Business
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