Local Small Businesses Feeling An Economic Pinch
The weakening local economy has been mentioned during Council debate by Mayor Fraser Tolmie, amongst other Council members, and now there is confirmation from the business community itself - many businesses both locally and provincially are feeling an economic pinch.
In their monthly Business Barometer the Canadian Federation of Independent Business (CFIB) released provincial results showing small business confidence fell 2.3 points in September to 53.1 from 55.4 in August. The national average index is 59.3.
“Saskatchewan’s small businesses lost some confidence in September, dropping to an index of 53.1 – which is almost 12 points below the range of index levels (65-70) normally associated when the economy is growing at its potential,” Marilyn Braun-Pollon, CFIB’s Vice-President, Prairie & Agri-business said in a statement.
In September's Business Barometer the majority of Saskatchewan small businesses who responded said the overall state of their business was good although it was below the national average.
In total the CFIB index found 28 percent of businesses in Saskatchewan say their overall state of business reported good compared to 42 percent nationally, 17 percent reported it was bad compared to 13 percent nationally.
“- 28 percent of Saskatchewan small businesses said there business optimism was good compared to 42 percent nationally
- 24 percent of Saskatchewan small businesses to cut full-time employment in the next three months compared to 15 percent nationally
- 7 percent of Saskatchewan small businesses to hire full-time employees in the next three months compared to 16 percent nationally
- 51 percent said their main operating challenge was insufficient domestic demand
- 70 percent of Saskatchewan small businesses reported taxes (including municipal property taxes) and regulations as the number one operating pressure
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When it comes to full-time employment the Business Barometer found percentage-wise the majority of businesses plan to layoff full-time workers than hire in the next three months.
.“Hiring plans have also remained weak with 24 per cent of business owners planning lay-offs in the next three months, which is a near record high for lay-offs in the province compared to only 7 per cent who plan on hiring,” Braun-Pollon stated.
The CFIB found 24 percent of businesses are planning to make job cuts (nationally it is 15 percent) whereas seven percent responded they would be hiring full-time employees in the next three months (nationally it is 16 percent).
The main operating challenges the index found facing small business were Insufficient domestic demand at 51 percent followed by shortage of skilled labour 29 percent and management skills, time constraints at 19 percent.
Taxes, which include municipal property taxes, were the number one cost pressure the CFIB index found.
Major cost pressures for small business include: tax, regulatory costs at 70 percent, fuel, energy costs at 55 percent, wage costs at 51 percent and insurance costs at 50 percent. It should be noted respondents were allowed to list more than one reason so the percentage totals will not equal 100 percent.
The CFIB saw the federal carbon tax as a major factor for the downturn in small business optimism.
“There is little doubt some of the major contributing factors are related to the costly federal carbon tax, ongoing Ag trade uncertainty with China, and the significant delays in harvest across most of Saskatchewan,” Brain-Pollon also said in the statement.
The federal carbon tax is assessed on all provinces which do not have their own provincial carbon tax and it includes Saskatchewan.
“There is little doubt some of the major contributing factors are related to the costly federal carbon tax, ongoing Ag trade uncertainty with China, and the significant delays in harvest across most of Saskatchewan”
The CFIB member survey found the resource based provinces of British Columbia, Alberta, Saskatchewan and Newfoundland and Labrador had the weakest business confidence in the country.
Read the entire CFIB Business Barometer by clicking here.
Rob Clark, CEO of the Moose Jaw and District Chamber of Commerce, echoes many of the concerns mentioned at Council and the CFIB report.
Asked to comment on the CFIB report Clark said “The recent Business Barometer study as noted has touched the primary indicators that are affecting our local economy and the confidence level for small businesses.”
He pointed to a very difficult situation for many small businesses in the city.
“It is unquestionable we are in need to see an increase in our economic climate soon,” Clark said, adding Moose Jaw and small businesses needed help in the short term.
“Small business and our community needs federal and provincial help and support now more than ever,” he said.
Clark said recent economic announcements – the proposed SaskPower natural gas fired electrical generating station, Carpere Canada’s large land purchase in the Southeast Industrial Park, Sycamore Energy setting up its provincial headquarters in the city and Imperial Distillery plans for a Scotch (double malt) whiskey distillery amongst others - are good in the long term but there needs to be help in the short term for local business.
“Recent announcements locally can pave a way for a brighter future, but this will take time to fully develop”
“Recent announcements locally can pave a way for a brighter future, but this will take time to fully develop,” Clark said.
It also needs to be noted Clark has been touring and featuring through live interviews the products and services offered by Moose Jaw businesses on the Moose Jaw and District Chamber of Commerce Facebook Page.
Additionally they offer a categorized link to Chamber members listing the goods and services they offer.
Watch for a future article on the Chamber's initiative to feature local small businesses and let residents know what they have to offer locally.