Confidence is returning to the small and mid-size business sector, according to the latest report from the Canadian Federation of Independent Business (CFIB).

The CFIB Quarterly Business Barometer Index now stands at 106.2, or three points above its September level.

“This is still below the average levels recorded over the past four years, but it shows that the small- and medium-sized business economy is in growth mode,” said Ted Mallett, CFIB’s chief economist, in a release.

The survey results also showed that retailers are generally optimistic about the current holiday season, despite retail performance being mixed.

Mallett said that about 40% of all business owners report their firms are doing much better or slightly better than 12 months ago, while 27% are doing somewhat or much worse.

For the next three months, 30% of owners say they expect much stronger and somewhat stronger performance and 23% predict weaker results.

Longer- term expectations are more positive, with 47% of all business owners expecting improved performance for their firms in a year’s time, while 38% expect their firms’ performance to remain stable.

The remaining 15% expect a weakening in their businesses during 2006.

Coast to coast, the December results show a convergence of expectations. Businesses in Alberta and British Columbia continue to be the most optimistic, although their indexes are at one- to two-year lows.

Nova Scotia and Ontario businesses have expectations that generally mirror the national average. Results in the remaining provinces are slightly below the national average.

Among Canadian retailers, the survey found that their expectations are, generally, on the rise even though their current performance is rather mediocre. Compared to last year, only 37% of retailers say they are performing at a stronger level, while 32% say performance is worse and the remaining 31% say they are doing about the same.

“On the employment front, there is a strong increase in hiring plans,” Mallett said. “We found that almost a third of business owners now expect to increase full-time employment in the next 12 months. That’s just slightly less than the record high recorded in March.”

Stronger prospects for the coming year also mean that fewer business owners are expecting to cut back employment. Less than 8% of respondents expect to cut full-time jobs in the next 12 months.

With employment needs still on the rise, labour shortages are showing no sign of easing. Attracting labour has become a greater need for many businesses and higher market wages are the result. More than 37% of businesses expect to increase wages by more than 2% in the next 12 months, and 24% plan to increase them at 2%.

The survey was conducted via fax and e-mail between November 21 and December 2 2005 and drew 2,402 responses. The national results are accurate to within +/- 2.0 percentage points, 19 times out of 20.