New Brunswick small-business owners were the most pessimistic in Canada in December, says the Canadian Federation of Independent Business.
One of the reasons for that is all the negative talk about the provincial deficit and debt since the September election, said Andreea Bourgeois, director of provincial affairs for the federation in New Brunswick.
In an interview Wednesday, Bourgeois said New Brunswick held a business summit in Moncton a few months ago and everyone was talking raising taxes to fight the deficit.
“We had numerous business leaders that actually seemed to endorse increased taxes,” she said.
“That scared the hell out of small-business owners.”
In fact, the No. 1 concern of New Brunswick businesses is tax and regulatory costs, said the survey.
While Canada’s small-business confidence rose more than five points from November to 69.3 per cent in the latest federation business barometer index, New Brunswick fell three points to 64.4 per cent.
Bourgeois said all the negative economic talk is a self-fulfilling prophecy when it comes to business optimism.
“The rest of the country became way more optimistic and we didn’t,” she said.
That made New Brunswick stand out on the index, said Bourgeois.
Another factor is that tourism and retail are still showing negative growth and those are important sectors of the economy in New Brunswick, she said.
“Those two sectors have never really recouped after the recession,” Bourgeois said.
The latest data also show that employment plans in New Brunswick are softening, said Bourgeois.
The survey in New Brunswick shows 16 per cent of businesses plan to decrease employment in the next three to four months, she said.
“In the past, that used to be around the five to six per cent mark,” said Bourgeois.
The good news is that 72 per cent of businesses plan to hold their level of employment and 12 per cent plan to increase it, she said.
Ironically, businesses also list a shortage of skilled labour as their No. 1 business constraint.
“The key word in that is skilled,” said Bourgeois.
“This is one indicator that has ticked up and we will monitor it for the next few months to see how it is going.”
Normally that’s a sign the economy is coming out of a recession, she said.
If that’s true, hopefully the next index report will show New Brunswick’s business confidence rising, said Bourgeois.
Susan Holt, CEO of the Fredericton Chamber of Commerce, said the decline in business optimism was minimal.
She said the number that jumps out at her is that 50 per cent of New Brunswick businesses think business is good and another 38 per cent think it’s satisfactory.
“That is a pretty large majority that thinks that things are going OK,” said Holt.
“That reflects what I see and hear from the members of the Fredericton business community, general strong levels of optimism with a few niche areas that are experiencing more concern.”
One of the sectors looking at 2011 with concern is the construction industry because of the decrease in public projects that are on the horizon, she said.
While there was a lot of negative talk about the province’s financial situation last fall, the provincial government is promising to cut the small business tax rate in half, she said.
Holt said she was also struck by the decline in businesses concerned about access to capital. She said that’s a big issue in the Fredericton business community and the chamber is planning a seminar on the subject later this month.
By STEPHEN LLEWELLYN
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