MNI DATA IMPACT: Canada Business Negativity Highest in 3 Years

By Greg Quinn

     OTTAWA (MNI) - Canada's small and medium business owners reported the worst

outlook and inflation expectations in three years in November, a sign just

before next week's Bank of Canada rate decision that the economy is facing fresh

pressures.

     The 17.9% of owners who said their firm's "general business situation" is

"bad" is the highest since March 2016, according to the Canadian Federation of

Independent Business Barometer. That's a jump from 11.8% in October and above

the last decade's average of 13.8%.

     The share of respondents saying their own situation was good fell to 40.8%

in November from 43.2% in October. Those calling it satisfactory also declined

to 41.3% from 45.1%.

     --SIGNALS

     Weaker business sentiment comes with the central bank closely watching for

signs that global trade tensions are creeping beyond major exporters into the

broader economy. 

     The BOC's next meeting is Dec. 4 and policy makers have held the rate at

1.75% this year as its peers have cut, saying Canada's economy has shown

resilience, but that will be tested further in coming months.

     "The results we're seeing harken back to the resource crunch of 2016" CFIB

economist Ted Mallett wrote in the report. That was when a plunge in energy

prices led the BOC to its last two rate cuts. "Business owners are not feeling

optimistic about their prospects for the next 12 months."

     --BROADER WEAKNESS

     Weakness was broader than just the energy industry in western Canada, with

confidence up in just three of 10 provinces. Similarly, only three of 13

industries showed a confidence pick-up in November. 

     The survey's headline Barometer figure fell to 56.1 in November from 59.8

in October, the lowest since March. The CFIB represents 110,000 members across

Canada and its poll had 822 responses this month, making it one of Canada's most

detailed scorecards.

     Managers surveyed see prices advancing 1.5% in the next 12 months, the

slowest pace in three years and well below the BOC's official 2% target. The

most common answer was from the quarter of respondents who saw prices unchanged

in the next year, while another 7.4% said prices will decline. 

     Future business prospects have also diminished, with 23.8% of firms saying

they would be somewhat or much weaker a year from now, the highest since

December. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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