Canadian business owners are increasingly optimistic about the domestic economy and about their business prospects, according to two studies released on Wednesday.
The Canadian Federation of Independent Business released its Business Barometer Index, revealing that small business sentiment rose to 67.7 in March, up more than a point and a half from February. It’s now six points above its August 2011 level, when European sovereign debt woes were hampering confidence around the world.
Measured on a scale between 0 and 100, an index level above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. An index level between 65 and 70 typically occurs when the economy is growing at its potential.
Sentiment is highest in Alberta, at 74.6, followed by Saskatchewan, at 72.0. Businesses on the East Coast are less optimistic, with an index of 58.3 in Newfoundland and Labrador and 57.9 in Prince Edward Island.
Overall, 40% of business owners describe the state of their business as “good”, almost three times the 15% of those who say their business is in “bad shape”.
Hiring plans have improved considerably, the Business Barometer shows, with 20% of owners planning to increase full time staffing levels in the next three or four months.
A separate study released on Wednesday shows a similarly positive outlook among businesses. The Sage Business Index, which reflects business owners’ confidence about their prospects for the next six months, rose to 63.65 in 2012, up from 59.35 in the summer of 2011.
Conducted by Sage, a provider of business management software and services, the poll of more than 2,200 Canadian businesses also showed that more than half of respondents believe the economy has improved in the past six months.
Compared to the results of the same survey conducted in other countries, such as the U.S., U.K., and Europe, Canadian businesses were more confident. But businesses in Canada and abroad remain pessimistic about the global economy.
“The findings of the Sage Business Index continue to reflect the positive sentiment that many Canadian businesses have about the future of their companies and about the continued growth of the Canadian economy,” said Nancy Harris, vice president and general manager of the Sage Simply Accounting business.
A majority of Canadian businesses surveyed reported revenue either staying the same or increasing over the past six months; only 19% of respondents reported a decline in revenue.
Inflation and the increasing cost of energy are among the top concerns for business owners, both surveys show. Other concerns include economic uncertainty, insufficient consumer demand, a shortage of skilled labour and global market instability.