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Business Barometer - Small business confidence continues to fall in June

Confidence among Canada's small- and medium-size businesses continued to fall in June, according to the Canadian Federation of Independent Business (CFIB). The Business Barometer® index dropped from 64.8 in May to 62.1, essentially wiping out the gains made since last summer when major concerns about Europe's debt situation had burst open.

"The weight of concern over the prospects for world economies continues to push business confidence down in Canada," said Ted Mallett, CFIB's chief economist and vice-president. "If there is any good news, it is that our numbers suggest the economy is still growing, albeit at a slow pace."

Business owners in Alberta (73.3) and Saskatchewan (72.5) have collectively been the most optimistic in Canada for 11 consecutive months, while entrepreneurs in Manitoba (65.9), New Brunswick (65.7) and British Columbia (65.6) are comfortably above the national average, and those in Newfoundland and Labrador (61.3) are close to average. Optimism is lagging in Ontario (60.7), Quebec (59.7), Prince Edward Island (59.5) and Nova Scotia (56.4).

"Insufficient customer demand was the most commonly cited constraint on business performance, although concerns about customer demand have gradually trended downward in 2012," added Mallett. "Meanwhile, concerns over shortages of working capital have increased slightly through the year, and about one business in four appears to have significant difficulties in finding necessary credit."

Declining confidence is prompting business owners to become more conservative in their hiring plans: 15 per cent of business owners expect to increase full-time staffing levels in the next three to four months (compared to 21 per cent who said the same in May), while 12 per cent said they will cut back (versus 10 per cent in May). Overall, 40 per cent of business owners described their state of business to be in "good" shape, about three-times the 12 per cent who said their state of business is "bad."

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