OTTAWA — Small business owners in Canada are not in a great mood these days.
In fact, optimism about the economy has fallen to its lowest level in six months among those companies, according to a survey released Friday.
The mood of retail operators was particularly affected in December by the country’s growth outlook.
The Canadian Federation of Independent Business said its monthly Business Barometer Index fell by 3.5 points this month to 62.3, the poorest showing since June and down from a reading of 62.6 a year earlier.
“After a period of relative smoothness through the summer and fall, small business optimism dropped off substantially in December,” said Ted Mallett, CFIB’S vice-president and chief economist. “One normally sees an index level of between 65 and 70 when the economy is growing at its potential,” he said. “There is not much variation by sector, but retail [in December] showed a bigger-than-average drop in optimism,” with the index component for that sector falling almost seven points to 60.0.
Across Canada, the index fell in seven of 10 provinces. The least optimistic was Quebec, with a reading of 53.8, followed by Nova Scotia at 58.3, Ontario at 62.9 and Manitoba at 63.4.
Newfoundland and Labrador was also down, with a reading of 68.1, “but back to levels typical of the first half of the year,” CFIB said.
“The exceptions are B.C., now with the nation’s most upbeat business sentiment with an index of 72.6, as well as less-upbeat Prince Edward Island (58.3) and New Brunswick (56.7).”
CFIB, which represents 109,000 small business owners, added there was no change in sentiment this month in Alberta and Saskatchewan, which had index readings that were still around the 70-mark.
The survey also showed hiring plans by member companies were mostly unchanged in December, with 18% saying they planned to add full-time staff in the next few months, compared with 12% who were expected to reduce their workforce.
“Capital spending plans are also steady, although new orders and accounts receivables turned slightly negative this month,” CFIB said.
The Bank of Canada has pegged economic growth at 2.3% in 2014, up from an estimated 1.6% this year, but still lower than the central bank’s previous forecasts.
Sonny Scarfone, a research associate at TD Economics, said small business optimism should improve in the coming months.
“Except for Q2, economic performance has been satisfying in Canada this year. This is, however, not reflected in current small business confidence,” Mr. Scarfone said in a note to investors.
“With Q4 GDP growth currently tracking 2.3%, which will provide a stronger hand off moving into 2014, confidence should pick up in the early winter months,” he added.
“This will be especially true for some of the harder hit provinces, which should benefit from a lower Canadian dollar and stronger U.S. growth next year.”