According to a report by the Canadian Federation of Independent Business (CFIB), New Brunswick
and Prince Edward Island
were the only two provinces to see small business sentiment improve in December 2014.
“Small business owners in oil-producing regions are understandably concerned about where and when the price of oil is going to bottom out, but all the fundamentals are still sound,” said Ted Mallett, CFIB’s chief economist. “Employment plans and the number of owners who report their businesses to be in good shape remains steady.”
However, Mallett warned that investment in these provinces could still prove a risky proposition, if investors aren’t willing to take a wait-and-see approach.
“Optimism is back at national levels, which is a good thing, but bad news travels faster than good news,” he added. “It could spur long-term growth in some ways, but it’s also pretty risky to invest based on fluctuating prices.
“Most investors aren’t going to do it right away, but rather need to observe the market over a period of time to see how things will hold up.”
The report, which measures business confidence on a scale of 0 to 100, found that optimism fell in December 2014 in eight out of 10 provinces, particularly among the top oil producers.
fell 6.5 points to 66.2, while Saskatchewan
suffered the same decline, falling to 56 points. Newfoundland and Labrador
saw a three-point drop, falling to 63.9 points.
“The price of oil is one of many drivers in our economy,” said Mallett. “And it would be a mistake to draw long-term conclusions during a time when the price is so volatile.”
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The plunging price of oil may be negatively impacting house prices and small businesses in Western Canada, but perhaps investors should look to parts of Atlantic Canada, which are experiencing a higher level of confidence in the market.