Despite job growth decline, businesses optimistic

While the Canadian economy may be creating fewer jobs in recent months, business optimism has improved, a new report confirms.

Between July and September of this year, businesses added 17,000 new jobs per month to the nation's payrolls, which is down from 29,000 jobs per month in the second quarter and 33,000 per month in the first three months of the year. Yet despite the downturn in job creation, optimism among small business owners has improved.

According to the Canadian Federation of Independent Business, sentiment levels increased in the month of October to 63.6, nearly a full point above the 62.7 score that was registered in September and approximately two points higher than August's 61.7.

Small businesses' confidence levels are measured by the CFIB's Business Barometer. On a scale of 0 to 100, any score that's above 50 indicates owners expect business activity to improve within the next year. Ted Mallett, chief economist and vice president of CFIB, said optimism levels among small business owners are as high as they've been in nearly three years.

"More business owners are saying their recent performance has been better than at any time since the recession began," said Mallett. "After falling back significantly in August and September, amid economic uncertainty, business owners seem to have restored at least some of their capital spending plans."

The most optimistic groups of business owners were found in Saskatchewan and Alberta, both with scores above 72. Nova Scotia and New Brunswick had the lowest marks with confidence levels of less than 59.

Despite small business owners' sense of optimism improving, Mallett said that concerns still remain for many entrepreneurs. Weak customer demand continues to be one of the most common issues cited by businessowners when it comes to improving business performance. At 41 per cent, low demand was one of the most frequent issues cited by owners addressing the factors that were constraining growth. Thirty-seven per cent said inexperienced employees were weighing down business performance and 31 per cent said it had to do with management skills and time constraints. Other cost concerns included wages, business insurance and taxes.

Among business sectors, the survey found health care and professional services were the most positive about future growth, followed by the manufacturing, wholesale and retail sectors. Optimism was weakest among hospitality and construction employers.