(March 16 – 09:20 ET) – Small businesses will be an important engine of economic growth over the next year, says the economists at CIBC.

Small business bankruptcies are declining, particularly in Alberta and Ontario, suggesting they are surviving, says CIBC. “The pace of small business start-ups in Canada continues to accelerate and it seems to be full steam ahead for the near future,” says Josh Mendelsohn, chief economist forCIBC. “This, in turn, is adding to the overall dynamism of the economy and will continue to support employment growth.”

The number of small businesses has expanded in recent years, while those in all other categories have declined. Benjamin Tal, CIBC senior economist and co-author of the report says, “It will be the smaller firms that will be an important driver of the economy since they face the most growth potential, particularly firms operating in the high tech and other business services sectors and in other segments such as funeral services and
fast food restaurants.”

CIBC finds that the small business sector is volatile – growing faster during recoveries and plunging faster in slowdowns. “Currently, the Canadian economy is strong and it’s for this reason that small business operations, particularly those with a handful of employees, are
expected to outperform during 2000 and until mid 2001 when the economy as a
whole is expected to slow,” adds Tal.

Overall, CIBC economists expect Canadian industries to grow at about 4% this year, led
by the communications industry and the business services. Small business is
expected to grow faster. It is calling for the economy to slow in mid 2001,
with small business feeling it harder then too.

Nevertheless CIBC expects the service sector to continue to grow as a segment
of the economy, fostering more small business growth. “The future is bright
for small businesses in Canada, especially those operating in the
technology, business services and restaurant sectors,” says Tal. “These
operations will continue to be an important segment in Canada since they’ve
helped to fuel the economy and continue to pump out more job opportunities.”
-IE Staff