An agriculture sector still struggling from BSE fallout and related trade issues continues to drag down business confidence in Alberta, says a quarterly survey.
The survey, conducted by the Canadian Federation of Independent Business (CFIB), found that in Canada overall, entrepreneurs are showing steady confidence in their firms’ performance and in their expectations for the year ahead.
However, high insurance and energy costs are creating difficulties for small- and medium-sized enterprises (SMEs).
As a result, the CFIB’s Business Barometer Index stood at 109 (1988=100) in March, down 0.9 points from December but about the same as a year ago.
While expectations in Alberta have fallen below the national average, SME owners in British Columbia are leading in optimism as they were in December.
About 34 per cent of the survey’s 3,676 respondents say their firms are doing much or slightly better than 12 months ago, while 30 per cent report their performance is somewhat or much worse.
Respondents foresee slightly better performance over the next three months, with 43 per cent saying they expect their firms’ performance to improve.
Longer-term expectations are better, as more than half of all respondents – 52 per cent – expect improved performances 12 months from now, while 34 per cent expect no change.
The remaining 14 per cent expect a weakening in their businesses over the next 12 months.
“These results indicate a core stability in the economy,” said CFIB chief economist Ted Mallett.
“The small business community has generally weathered the main economic shocks of mid-2003 and is looking positively to the future, which bodes well for Canada’s economic prospects in the year ahead.”
Mallett said weakness in the agriculture sector is having harmful effects on a significant portion of linked industries, which are the least optimistic about the future.
The most optimistic sectors in the first quarter are computer and related sectors, followed by health-care practitioners, structural contracting, industrial machinery wholesale and sporting goods retailers.
Sixty-eight per cent of SME owners reported that insurance premiums as a business factor affecting their bottom line had worsened in the first quarter, while eight per cent said they had improved.
Uncertainty about energy prices is another challenge for SMEs across Canada, with 64 per cent of small businesses reporting that energy prices as a factor affecting their firm’s performance has worsened, and only seven per cent reporting an improvement.
On the employment front, prospects for SME job creation remain stable, with 29 per cent of businesses planning to increase their full-time employment over the next year, and only seven per cent looking to reduce their staffing levels.
Firms in the manufacturing sector are the most bullish about their hiring plans for 2004, with almost 41 per cent planning to add to their workforce, while almost 40 per cent of construction and business services companies plan to do the same.
The survey was conducted March 8 to 19 across Canada. The national results are accurate to within ±1.6 percentage points, 19 times out of 20.