Alberta business unfazed by floods
Small business owners are less optimistic about Alberta’s economy than they were last month, according to a new report that surprised at least one analyst who was expecting a bigger dip in confidence levels following June’s devastating flood.
The Canadian Federation of Independent Business said Thursday that Alberta is no longer home to the most confident small business owners in Canada after falling behind Saskatchewan in July.
Its monthly report shows Alberta’s small business confidence index dropped by 1.8 points to 66.8, still within the threshold considered to indicate strong confidence in the economy, according to CFIB.
Richard Truscott, Alberta director for CFIB, said he was expecting a drop of five points or more following the flood that hit an estimated 1,500 small businesses.
“We’ll have to wait to look at future results for August and September to see if perhaps this is the start of a trend,” Truscott said. “But as it looks now, the floods didn’t appear to have a significant impact on the outlook of small business owners in Alberta.”
There are concerns that flooding will slow down consumer spending over the short term, according to the Retail Council of Canada. But it’s too early to suggest how long that will last or how frugal Albertans will be until spending reports roll out in the coming months, said Lanny McInnes, the retail council’s Prairies director.
“As things go back to normal and things kind of recover, we’re still anticipating that the Alberta market is going to be very strong and more than likely still leading the country in terms of overall sales growth,” McInnes said.
Alberta shoppers spent more than $6.1 billion in retail sales in May, a record for the province, according to Statistics Canada. Looking at sales growth over 12 months, Alberta led all provinces with a 7.9 per cent surge in retail spending.
Adam Legge, president and CEO of the Calgary Chamber of Commerce, said confidence among Alberta business executives would likely be driven more by market dynamics, such as potential pipeline announcements, than the aftermath of the flood.
Still, Legge said those residents and business owners who were rocked by last month’s deluge may be facing big expenses not covered by insurance or government assistance. He said they would have to take a hard look at their expenses and discretionary spending.
“At the end of the day, that was about 10 per cent of Calgarians, so there was 90 per cent that was really unaffected,” he said. “We’re hoping they will get out and support businesses in the affected areas to keep them stable.”
The Chamber of Commerce is hosting a recovery expo next week to guide businesses through government assistance programs, give them banking advice to stay afloat and help them pass building and health inspections to reopen.
The July 31 expo, at the Telus Convention Centre, will also touch on the mental health of business owners and their employees, given that big losses can weigh heavily, Legge said.
The Chamber president expects it will become clear in the next 60 to 90 days how many businesses are unable to reopen once they find out what insurance coverage they are eligible for, and whether they can receive government support.
According to the Canadian Federation of Independent Business, the flood’s minimal impact on small business confidence is a welcome development.
“What it really speaks to is the resiliency of business owners and the fact that it takes a lot to really impact the psyche, the confidence of business owners across Alberta,” Truscott said.
There were strong economic signals on Thursday, with a new report showing Alberta led the country in earnings growth of non-farm payroll in May, compared to the same month a year before.
The province posted a 4.9 per cent gain in average weekly earnings over the 12-month period, rising to $1,114, Statistics Canada said. There was growth across most sectors during the period, led by transportation and warehousing, with a 15.5 per cent jump, and construction, which saw a 9.5 per cent boost, the national agency said.
And Alberta has surpassed Ontario as the third-largest manufacturer of wood products. From June 2012 to May 2013, Alberta accounted for 15.7 per cent of national sales, compared to Ontario, at 14.8 per cent, Statistics Canada reported. It was the first time Alberta edged ahead of Ontario since the agency started tracking the data in 1992.
According to CFIB, small companies reported that a skilled labour shortage remains a top challenge for future growth.
Still, hiring expectations are virtually unchanged from June levels, with 31 per cent of respondents indicating they plan to hire full-time staff in the next three months, compared to only six per cent who expect a reduction, CFIB said.
“We would have thought that perhaps they would have moderated their expectations in terms of hiring for the next few months (due to the flood),” Truscott said.
“But that really hasn’t been impacted at all.”