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Smaller firms here feeling bearish

Business barometer finds 'huge' confidence decline

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A growing number of Manitoba's small and medium-sized businesses are feeling a little down in the dumps these days, according to the latest monthly survey by the Canadian Federation of Independent Business.

The CFIB said Manitoba's business barometer index, which measures business confidence, dropped to its lowest level in more than two years in August, falling 6.4 points to 58.1 from 64.5 in July.

"That is a huge decline," said Janine Carmichael, the CFIB's Manitoba director.

Carmichael said the last time confidence levels were that low was mid-2010. August was also the first time this year confidence levels in Manitoba have fallen below the Canadian average, she noted, "so that's a big concern."

The CFIB said Canada's confidence index fell for the fifth consecutive month in August, dropping to 60 from 60.9 in July.

Carmichael said with the exception of a brief uptick earlier this summer, confidence in Manitoba has been drifting downward since the start of the year. And a combination of factors is likely to blame.

"It could be demand (for their products and services), or their staffing situation," she said. "It could even be jitters about what's going on in the world."

Rising costs are also top of mind with local business operators, with 73 per cent of Manitoba respondents citing taxes and regulations as their biggest cost pressure. Other costs they cited were wages (59 per cent) and fuel and energy (50 per cent).

Carmichael said rising costs associated with tax increases and increased government regulation have been a long-standing concern for local businesses.

"But I have never seen it at 73 per cent. That's the highest in the country," she said. "I sure hope that acts as a wake-up call for politicians."

Carmichael pointed out the City of Winnipeg raised municipal property taxes this year for the first time in many years, and the provincial government increased the sales tax and the provincial minimum wage.

All of those changes added to the cost of doing business, she said, and sent the wrong message to the local business community.

The one bright note in the latest survey results was 76 per cent of Manitoba respondents said they expect no changes in their full-time employment levels over the next three to four months, Carmichael said.

"And 14 per cent said they plan to increase full-time employment. So there's lots of stability there... "

Manitoba's confidence level in August was the fourth-lowest among the provinces. Prince Edward Island has the lowest confidence level at 46.3, while Saskatchewan had the highest at 69.5.

Carmichael said normal confidence levels for Manitoba are 60 to 65 points. The peak was 74.9 in March of last year.

The CFIB said the steady decline in national confidence is likely a reflection of the slow growth in the national economy.

"(But) just to keep things in perspective, the index is still more than 20 points higher than the recessionary low of 39.9 in December of 2008," said Ted Mallett, CFIB vice-president and chief economist.

-- with files from The Canadian Press

Republished from the Winnipeg Free Press print edition September 6, 2012 B5

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