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Province's business leaders losing confidence in local economy

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Optimism about the province's economic future slipped among provincial business leaders this year, according to Probe Research's annual Manitoba Business Leaders' Index.

The annual survey of 200 business leaders, released exclusively to the Winnipeg Free Press, shows 70 per cent of business leaders are optimistic about the province's economic future, down from 78 per cent a year ago and 74 per cent in 2011.

There is typically not a lot of fluctuation in sentiments regarding business and hiring expectations from year to year in the survey. (It is considered to be accurate with positive or negative 6.9 per cent of what the results would be had the entire population of Manitoba business leaders been surveyed.)

But Curtis Brown, Probe's senior research associate said, "When it comes to something like this -- economic confidence down a bit -- that's something that stood out."

Brown said at 70 per cent people are still quite optimistic. He said the decline in confidence could have something to do with concerns about provincial government policies such as the increase in the provincial sales tax and issues around getting the provincial deficit under control.

"Some businesses would be concerned about that," Brown said. "We are seeing economic recovery in other areas like Alberta and Saskatchewan. Those province are growing at a healthy rate and so there may be a lack of confidence here relative to that."

But even if there is less confidence about the economy as a whole, business people are increasingly confident their own businesses will perform better a year from now with 52 per cent expressing confidence, up from 47 per cent last year.

While that increase falls within the 6.9 per cent margin of error and is not statistically relevant, it's not surprising.

"Business people are programmed by nature to be optimistic. It's part of their character -- they have to think things will be better," said Scott McKay, president and CEO of Probe.

When it comes to a softening of confidence about the province, McKay said the increase in the sales tax did not help.

"Whether it affects the bottom line or not, it's emblematic of things that are wrong," said McKay. "It (the sales tax increase) is one way we can tell things are wrong. That's probably more what it is."

Chuck Davidson, president and CEO of the Manitoba Chambers of Commerce, said the province's handling of the PST increase has not gone over well with the business community, but that's not the only issue.

"I think the PST has really soured the optimism of a lot of Manitoba businesses," Davidson said. "We hear it all the time about how it makes us more uncompetitive, specifically with Saskatchewan."

On top of that there are other indicators, Davidson pointed out, that do not paint the provincial economy in the best light. Earlier this week, Statistics Canada reported there was no growth in average weekly earnings in Manitoba from September 2012 to September 2013, compared to a 2.9 per cent increase in Saskatchewan, and October's inflation rate was higher in Manitoba than anywhere else in the country.

"There are a whole bunch of variables in the economy that are not great for Manitoba," Davidson said. "We just plug away. Businesses do not close down. But could it be better? Absolutely."

Republished from the Winnipeg Free Press print edition November 29, 2013 B6


Updated on Friday, November 29, 2013 at 7:01 AM CST: Replaces photo, changes headline

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