The price of oil isn’t the only thing plunging these days.
Small business confidence in Alberta — not long ago the highest in the nation — is now the lowest in Canada.
“We have gone from having the most optimistic entrepreneurs in the country to the least in just two months. 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,” said Richard Truscott, Alberta Director for the Canadian Federation of Independent Business.
“The big slump in oil prices is starting to hit small businesses in Alberta particularly hard because, despite all the talk of economic diversification, oil and gas is still fueling all parts of the economy. Unfortunately, if oil prices stay down for more than a few months, it will start to push some small businesses over the edge. The worst thing for the Alberta government to do would be to hike taxes and siphon even more money out of the economy, and make a bad situation a lot worse.”
Just last October Alberta was the highest in the country at 74.6 on the index.
In the federation’s latest business barometer survey results, released Thursday, Alberta’s small business confidence index dropped 11.4 points in January, one of the largest monthly declines ever recorded in the province. The measure sat at 54.8, the lowest level since the 2009 recession.
The 100-point scale measures business owners’ outlook for the coming year — an index above 50 means owners expecting stronger performance outnumber those expecting weaker performance. A measure of 65-70 is typical when the economy “is growing at its potential,” says the CFIB.
The report said 26 per cent of entrepreneurs planned to add full-time staff over the next three months, down five points from December, while 17 per cent expected a reduction in their workforce, up seven points.
When asked to describe the general health of their business, 48 per cent said it was “good”, down six points from December. Only eight per cent described it as “bad”, a one point dip, while the rest said it was the same as December.
The barometer scores by province are:
British Columbia – 71.7
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
Alberta – 54.8
Earlier this month, ATB announced its Business Beat Economy Index fell below 50 for the first time since it started tracking economic sentiment among small and medium-sized business owners and operators. ATB said a score under 50 suggests more owners believe the province’s economy will be worse off six months from now than those who feel it will be better.