Canadian small-business owners say they plan to expand or maintain their pay rolls, a trend that is expected to give the economy a boost over the next several months.
South of the border, the outlook is less rosy. The U.S. National Federation of Business last week reported deteriorating hiring prospects and anticipated a higher unemployment rate in the coming eight months, with a significant number of small businesses planning to delay or reduce their work forces.
Based on a survey of 773 members in May, the NFIB found 13 per cent of its membership plans to increase employment over the next three months, but the figure is down five index points from March. Another 8 per cent said they plan to reduce their work force.
In a May report by the Canadian Federation of Independent Business, 18 per cent of its members said they are planning to increase their payrolls over the next three to four months, while 71 per cent plan to maintain staffing levels. Only 11 per cent say they plan to decrease their workforce.
The finding are based on 853 responses, collected from a random sample of CFIB’s membership, and are considered accurate to ± 3.4 per cent, 19 times out of 20.
While a greater proportion in Canada say they plan to decrease their workforce compared to the U.S., Ted Mallett, vice-president and chief economist at CFIB, said the numbers don’t convey the whole picture.
“Canadian small-business firms are quite a bit more positive on their hiring intentions than they are in the States,” he said, explaining that unlike the U.S., in Canada, the proportion of business owners who plan to reduce their workforces has been steadily decreasing from 16 per cent in May 2009 and 12 per cent in May 2010.
“Employment is a bit of a lagging indicator, so you have to be very confident that you will be able to pay your new hires in the foreseeable future,” Mr. Mallett said. “The economy is doing better here, especially when we are talking about the western resource-rich provinces. We did not have the same amount of structural turmoil in the economy as was in the U.S., and especially in the construction and financial services sectors.”
Also, the figures in the U.S. have been seasonally adjusted, while this is not the case in Canada, because the CFIB has only been tracking date for the last two-and-a-half years.
Since small and medium-sized businesses account for approximately 50 per cent of total employment in Canada, according to Capital Economics, the boost in hiring is a promising trend for the national economy.
Chuck Shabsove, president of Capital Appliance & BBQ, an Ottawa-based firm, said business is booming and he plans to add four new staff to his current 27 employees.
“Some of the big box firms – Home Depot and Lowes – were really being aggressive with their sales, so we decided to differentiate ourselves by getting more high-end quality products,” he said. “I’m feeling really confident with how it’s gone. Revenues are up and I think the majority government is a good thing for the economy.”
In Alberta, Jason Parks of Profab Welding said he took a pay cut, but got through the recession without laying off any of his 100-member staff. Primarily manufacturing for the oil industry, the company, with locations in Grande Prairie and Red Deer, expanded into specialty areas, such as instrumentation and pressure equipment when the recession hit.
“I just hired 10 people and plan to hire about 30 more full-time over the next few months,” Mr. Parks said. “We’re in the heart of the oil patch and we are booking work right now for next spring -- and in some cases, we have contracts lined up for the next three years. Things are really looking up.”
