According to the latest Business Barometer report from the Canadian Federation of Independent Business (CFIB), which cites figures from a survey of small business owners throughout the province in December, confidence levels are down to 63.9 in this province on a scale of zero to 100.
That’s an almost 10-point drop since August, when confidence in the future of was higher here than in any other Canadian province.
“We started noticing back in September that there was a trend going lower,” said Vaughn Hammond, the CFIB’s director of provincial affairs in Newfoundland and Labrador. “It was hard to nail down three months ago whether oil was the (factor) or not, but I think what we’ve noticed, even across the country, is that lower oil prices are having an effect on confidence throughout the country.”
He said a drop in confidence in Saskatchewan and Alberta reinforces the fact that oil — which was valued at $50.88 per barrel Tuesday evening — is a factor.
The countrywide index shows an overall drop in confidence to 61.9 from 65.9 in November. The most confident business owners in December were in British Columbia, with an index of 72.4.
Hammond said low oil prices mean two things for business owners in this province.
“Lower fuel prices are going to benefit the operation, and it’s going to be cheaper to run an operation. However, some of the things that we’re hearing from our members now is that they’re raising questions as to … what action government’s going to take to deal with this government’s financial situation, how is that going to impact them,” he said. “Is there going to be increased borrowing, or is government going to actually focus on spending, or curbing spending, so that they shouldn’t have to raise taxes that much?”
He said judging by the December Business Barometer, local entrepreneurs are not making any rash decisions based on the price of oil.
“Right now we’re not seeing anything, because I think there’s a wait-and-see approach being taken. The indicators that we see in our barometer show that everything seems to be where it should be right now, notwithstanding some of the seasonality that may occur in terms of intentions of hiring and intentions not to hire,” Hammond said.
According to the results of the survey, six per cent of respondents — 10 per cent fewer than in November — said they planned to hire full-time staff.
On the other hand, four per cent fewer entrepreneurs — 19 per cent — said they plan to make staffing cuts.
After a seven-point drop since November, fewer business owners in this province — 56 per cent — said they characterized the state of the economy as good.
However, as in November, not a single respondent said they would characterize it as bad.
The December survey shows availability of space is the biggest issue facing small business owners, with 28 per cent identifying it as a problem.
Hammond said the CFIB will take a closer look at this issue, as that number hovered between 24 and 30 per cent all year long.