A new survey by the Business Development Bank of Canada (BDC) has found that small business managers plan to keep their investment spending flat throughout 2019.
The BDC survey found that 32% of small business owners expect to invest less this year, slightly ahead of the 31% who plan to spend more. That result is worse than the Bank of Canada’s last quarterly business outlook survey, which showed 46% of Canadian companies large and small plan to spend more in 2019 versus 21% that planned to scale back their spending.
"Rising concerns about the economy and rising capacity constraints -- especially with the ongoing shortage of qualified labour -- all weigh on investment intentions," said BDC in a statement about the report’s findings.
The slowdown in business investments comes as consumer spending is also slowing down. Finance Minister Bill Morneau devoted several new measures in his fiscal update last November to business investment tax breaks to help Canadian companies stay competitive with their U.S. counterparts.
The development bank’s report showed mixed views on the current economic situation. While 73% of business owners said they expect their revenues to grow this year, little changed from 2018, confidence in Canada’s economy fell to 58% from 64% in a previous survey.
The biggest reasons for not investing this year were labour shortages and a lack of cash flow, with about half the respondents citing each of those reasons. Technology and wholesale company managers more tied to exports showed the most investment confidence while those associated more with consumer spending saw declines, according to the BDC report.
Among provinces, Alberta showed the least optimism for 2019, with only 35% of managers in the oil-rich region confident about the economy. Quebecers were most confident with 78% optimistic about the overall economy and year ahead.
