The American debt-ceiling debate and debt crisis in Europe dampened the confidence of small business owners in B.C. in August, according to the Canadian Federation of Independent Business (CFIB)’s Business Barometer Index released today.
“It’s not really based on internal Canadian market conditions, it’s the fear of the future, what international developments might do to B.C. and Canadian businesses,” said Ted Mallet, the CFIB’s vice-president and chief economist.
Mallet noted that B.C.’s most recent index reading, which includes both July and August, was 65.1: a drop of approximately 3 percentage points.
Nationally, the index is measured every month. For August, it dropped to 61.7 from 68.3 in July.
Mallet said one likely impact of diminished confidence across Canada is many small businesses will hold off on “bigger-ticket” capital expenditures.
“We ask people about their capital expenditure plans – vehicles, computers, machinery and equipment, real estate. All those measures are down from what we had seen in July.”
He emphasized that the drop in confidence isn’t really based on the Canadian economy but the broader global situation, and noted that, for example, August responses on future hiring intentions matched last year’s August view of hiring.
“Things look worse than they really are,” he said. “Optimism is down but it’s not out.”
He also commended the Bank of Canada’s move, announced this morning, to hold interest rates low.
“An accommodative monetary policy where people have the ability to borrow at reasonable rates is positive,” he said. “It’s a good move for the economy and that’s certainly going to help out.”
Jenny Wagler
Twitter: JennyWagler_BIV