The latest Quarterly Business Barometer, by the Canadian Federation of
Independent Business (CFIB), shows confidence returning to the small-
and mid-size business sector.
CFIB’s chief economist, Ted Mallett, says that about 40 per cent of all business owners report their firms are doing much better or slightly better than 12 months ago, while 27 per cent are doing somewhat or much worse. For the next three months, 30 per cent of owners say they expect much stronger and somewhat stronger performance and 23 per cent predict weaker results.
Longer-term expectations are more positive, with 47 per cent of all business owners expecting improved performance for their firms in a year’s time, while 38 per cent expect their firms’ performance to remain stable. The remaining 15 per cent expect a weakening in their businesses during 2006.
Stronger prospects for the coming year also mean that fewer business owners are expecting to cut back employment. Less than eight per cent of respondents expect to cut full-time jobs in the next 12 months. Part-time employment is expected to remain stable for 80 per cent of firms, decrease for six per cent and rise for 14 per cent. Firms in the business services and manufacturing sectors have the strongest plans for increasing employment. Agriculture and retail trade, which traditionally have the lowest job prospects, have also posted respectable employment growth expectations.
The most common difficulties faced by businesses continue to revolve around input prices, particularly energy costs. Insurance costs remain a significant concern. Interest rates have climbed since the fall, and there has been an increase in the number of business owners reporting more difficult access to bank financing, from 11 per cent in September to 18 per cent in December.
With employment needs still on the rise, labour shortages are showing no sign of easing. Attracting labour has become a greater need for many businesses and higher market wages are the result. More than 37 per cent of businesses expect to increase wages by more than 2 per cent in the next 12 months, and 24 per cent plan to increase them at 2 per cent.
(Source: Canadian Federation of Independent Business)
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