Oil prices at the start of the year have owners and operators of Alberta small and mid-sized enterprises (SMEs) feeling more optimistic about the economy and their business' future.
The ATB Business Index, which measures Alberta business owners' confidence in their own operations, measured 66.1 for the first quarter of 2017. That's the highest ATB Business Index score since the fourth quarter of 2014, when energy prices started to decline. It's also a jump of 17.6 points compared to the previous quarter, the largest quarterly increase in the ATB Business Index since its inception in 2013. A score above 50 suggests more businesses are optimistic than pessimistic.
Meanwhile, the ATB Economy Index, which measures Alberta business owners' confidence in the Alberta economy, registered its highest result since the third quarter of 2014 at 58.4. That's 22.3 points higher than the previous quarter, representing the largest-ever quarterly increase in the ATB Economy Index.
More than seven in ten (72 per cent) of Alberta business owners (an increase of 22 from last quarter) believe the province's economy will be better off or the same six months from now, while 84 per cent of business owners (an increase of 18 percentage points from last quarter) believe their company will be better off or the same six months from now.
"Confidence continues to be directly linked to the price of oil," said Teresa Clouston, ATB's Executive Vice-President, Business & Agriculture. "The latest index results confirm that many businesses have weathered the storm and are looking forward to the future, however it also means confidence may be fickle if the price continues to fluctuate as it has recently."
Business owners in the energy sector are more optimistic about their own operations than their counterparts in other industries. Among energy SMEs, the ATB Business Index was 74.3, its highest score since the second quarter of 2014, followed closely by manufacturing (74.1), retail (71.4) and construction (62.9). All sectors experienced significant increases in sentiment for both indexes.
"The recovery is not going to be quick or easy," added Clouston. "We know unemployment is still high and there remains a surplus in the commercial real estate market. And while Albertans are spending at retail shops, they're not spending as much as they did two or three years ago. But it is nice to see optimism on the rise."
The ATB Business Beat survey is conducted four times per year to take the pulse on small and mid-sized Alberta-based businesses. The complete survey results will be released next month.
SOURCE: ATB Financial
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