Business confidence took another tumble in September, largely as a result of rising fuel prices, according to the latest quarterly survey of small- and medium-sized enterprises, by the Canadian Federation of Independent Business (CFIB).

CFIB’s chief economist and vp of research, Ted Mallett, said that 88% of independent business owners across the country find energy prices are a major cause of concern.

“The drop in optimism we see in this quarter is likely temporary, but recovery will depend on the future path of fuel costs,” said Mallett, in a release.

The CFIB Quarterly Business Barometer Index now stands at 103.0 (1988 = 100), fully four points lower than the previous June index level of 107.0 and almost seven points below the previous peak of 109.8 registered in March 2005.

Overall, 39% of all business owners say their firms are doing much better or slightly better than one year ago, while 27% say they are doing somewhat or much worse. However, longer-term expectations are more positive, with 42% of business owners expecting stronger performance during the next 12 months with only 20% expecting a weakening of their performance over the next 12 months.

Mallett said the September results show a tale of two regions. Businesses in Alberta and BC continue to lead the nation in optimism, while businesses in the Maritimes displayed sharply lower optimism compared to previous surveys, with Newfoundland showing the most optimism of the four Atlantic Provinces. For the second quarter in a row optimism is down in central Canada, and particularly in Quebec.

On the employment front, hiring plans are holding steady in September with 26% of business owners planning to increase full-time employment over the next year.

Among the 10 broadly based sector groupings, the business services sector along with health and education — the industries perhaps least directly impacted by fuel prices — are the only sectors where expectations remain generally unscathed. The remaining eight sector indices all declined. Most notably, transport, agriculture and retail sectors showed the biggest declines as high fuel prices wrought havoc with profit margins and business plans.

Apart from fuel prices, insurance premiums were cited as problematic for 61% of respondents, signalling the still-pressing need to address insurance market distortions.