Although business confidence dropped in B.C. between November and December, the West Coast province still boasts the highest rating throughout Canada.
The Canadian Federation of Independent Business’s (CFIB) monthly index found confidence levels among B.C. small businesses fell from 73.9 in November to 72.4 in December.
That 1.5-point dip was the smallest decline in Canada after confidence among Quebec small-business owners dropped 0.7 points to 58.2.
Business confidence levels across Canada fell four points month-to-month to 61.9 and only Prince Edward Island and New Brunswick posted slight gains.
CFIB chief economist Ted Mallett said in a statement falling oil prices have “severely dampened small business optimism across the country.”
But a combination of a lower Canadian dollar and greater demand from the resurgent U.S. market is likely to boost confidence among provinces linked to exports, TD Economics analyst Admir Kolaj said in a note to investors.
“Being a small resource-based economy, it shouldn't come as a surprise that the recent 50% plunge in oil prices would hurt business confidence,” he said.
“Indeed, lower oil prices are expected to bring down corporate profits in 2015, which in turn will weigh on business investment, employment and overall economic activity in Canada.”
About one-third of B.C. respondents said the biggest limitation on growth was the lack of skilled labour. Insufficient domestic demand (30%) and time constraints (30%) rounded out the top three reasons for growth problems.
When it came to cost constraints, 60% of B.C. respondents reported tax and regulations to be the biggest issue, while insurance (49%) and wages (49%) were the next most pressing challenges.
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