Confidence Up, but Small Business Still Cautious, says CFIB

Confidence among small to mid-sized business owners continues to rise, especially among those in the insurance sector, but they remain cautious about economic recovery.

Overall optimism went up to 66.9 in January, regaining ground lost the previous month, reports the Canadian Federation of Independent Business (CFIB) in its latest Business Barometer. Certain sectors had a brighter outlook than others: those in business and professional services rated their confidence at 71.2, just ahead of those in finance, insurance and realty, who ranked it at 69.4, compared to those in agriculture (54.5) and natural resources (56.1).

A gradual recovery

The latest results chart a gradual climb in confidence since the end of 2008, but the majority of small business owners aren’t celebrating—yet: only 36% report that their overall state of business is “good,” compared to 47% who say it’s “satisfactory.” Others—17%–paint a grimmer picture, calling the state of business “bad.”

And despite the higher confidence shown by the finance and insurance sector, one CFIB member doesn’t predict an easy turnaround in the Barometer’s commentary: “We are an insurance broker and anticipate the short to mid term business conditions will improve but still remain difficult,” they state.

Insurance costs a worry

Taxes and insurance costs remain key costs concerns for small business owners, who rank them as their top concerns at 64% and 50% respectively, followed by occupancy costs (23%) and capital equipment and technology costs (23%). One CFIB member noted,” We are deeply concerned about the increased personal costs caused by the HST tax.”

Other challenges pose additional barriers, they note in the survey, citing insufficient domestic demand (50%), shortage of working capital (30%), shortage of skilled labour  (27%) and lack of management stills and time (26%) as their main business constraints.

What about the surge in confidence? “The good news for the month is a solid improvement in optimism among construction, manufacturing, wholesale and transportation companies, which is signaling a strengthening industrial turnaround,” Ted Mallet, the CFIB’s vice president of research and chief economist, notes in the report.

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