Alberta small and mid-sized business owners and operators (SMEs) seem to agree with ATB Financial Chief Economist Todd Hirsch's prediction that the province's economy could be in for a bumpy start to 2015.
The latest ATB Business Beat Economy Index, which measures optimism among Alberta's SMEs, fell to a low of 44.5. A score under 50 suggests more SMEs believe the province's economy will be worse off six months from now than those who feel it will be better off in six months.
It's the first time the Economy Index has fallen below 50 since ATB began tracking sentiment in 2013. In the previous Business Beat, released in October, the ATB Economy Index was 68.6.
“Simply hoping your business will do better is not a strategy,” says Wellington Holbrook, ATB's Executive Vice-President, Business & Agriculture.
“If you have concerns about your business prospects, don’t wait. It's a good time to talk to an experienced business banker and see what options are available to you, like deferred loan payments or extended amortization periods.”
Despite being less optimistic about the province's overall economy, Alberta’s business owners remain confident in the future of their own business. The ATB Business Index was 67.5, down from 70.4 in October.
“In my career, I have supported entrepreneurs from coast to coast, and I can say this optimism isn’t that surprising to me,” adds Holbrook.
“Alberta’s entrepreneurs stand out as tough, tenacious and resilient—outstanding qualities in a province with a notoriously volatile economy.”
When asked about the impact of the lower price of oil, 69 per cent of SMEs surveyed said their business had not yet been affected. Sixteen per cent said their business had been negatively affected, while 13 per cent said the lower price had a positive impact. In the energy sector, the number of negatively affected SMEs jumps to 48 per cent.
"Obviously the oil patch feels the heat first," adds Holbrook.
“Other businesses may not feel it yet, but it all comes down to how long these oil price pressures persist as to whether or not it will trickle into other sectors. Obviously, most Albertan business owners are hoping these challenges won’t last long.”
"At ATB, we've been standing by Albertans through good times and bad for more than 75 years and we'll continue to do just that."
The complete Business Beat survey, which interviews randomly-selected Alberta-based SMEs each quarter, will be released later this month. To receive the complete report when it is out, sign up at atb.com/businessbeat.