Hopes that Alberta business operators might shrug off the effects of low oil prices were dashed on Thursday, when Canada’s largest association of small and medium-sized businesses released the results of its latest member survey.
The Canadian Federation of Independent Business reported that business confidence in the province has tumbled to its lowest level since the 2009 recession. The optimism level of small and medium-sized businesses questioned dropped to 54.8 on a 100-point scale in January — down 11.4 points from December.
“We have gone from having the most optimistic entrepreneurs in the country to the least in just two months,” said Richard Truscott, CFIB’s Alberta director. “Clearly, big storm clouds are brewing in the minds of our province’s entrepreneurs, much of it obviously related to the recent drop in oil prices.”
The January business confidence index for all of Canada was 63.5, up about a point and a half. Survey respondents from British Columbia produced the highest provincial score, at 71.7, followed by Prince Edward Island (69.8), Ontario (67.8), Nova Scotia (64.9), New Brunswick (64.1), Newfoundland (60.3), Manitoba (57.1), Quebec (56.3), Saskatchewan (55.1) and Alberta.
CFIB said the decline in Alberta was one of the largest ever recorded for the province in a month.
When it comes to hiring plans over the next three months, 26 per cent of business respondents in Alberta said they expected to add full-time staff, while 17 per cent anticipated a reduction. That compares with the survey results for December, when 31 per cent of those questioned thought they’d be staffing up and 10 per cent were predicting smaller payrolls.
“One silver lining in an otherwise dismal outlook among Alberta’s entrepreneurs is the relatively positive view they continue to hold in the health of their own businesses,” said Truscott.
Forty-eight per cent of respondents described the general health of their business as “good” in January — down six points from December but well above the national average. Only eight per cent considered their operations to be in a “bad” state, a one-point change from December.
Truscott warned the province against boosting taxes as a way to counter its diminished energy revenues.
“The absolute worst thing the Alberta government could do in these circumstances is siphon a bunch of money out of the economy through tax hikes in the next provincial budget.”
CFIB says a business confidence index between 65 and 75 means the economy is growing at its potential.