Canada's economy still appears to be adrift and with only limited power. The Business Barometer® Index of small business confidence fell more than a point in July to 58.2, its lowest level since mid-2009 and just below the point that corresponds with zero real GDP growth (59.8 using the past six years of monthly data).

The general mood patterns across the country remain the same, but it appears the malaise on the prairies and in Canada's underperforming central core is beginning to weigh sentiment down in British Columbia, where the index fell to a two-year low of 67.5. Alberta businesses remain the least optimistic, but at 43.9 its index is not markedly below June's level. Saskatchewan's index crept up to 54.5 this month, but Manitoba's fell back to the 58.2 mark. Ontario and Quebec are treading water, with confidence index levels of 60.7 and 58.5 respectively. Apart from BC, only the Atlantic Provinces are showing some jump, with the summer tourist season likely helping to buoy optimism.

On a scale between 0 and 100, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. One normally sees an index level of between 65 and 70 when the economy is growing at its potential. The resources sector continues to show the weakest levels of optimism, but below-par sentiment in manufacturing, construction, wholesale and retail are offsetting reasonably good outlooks in the rest of the services sectors.

After performing reasonably well in the spring, other indicators have turned more sour. Employment plans are back below normal seasonal patterns, with only 17 per cent of businesses planning to hire additional full-time staff in the next few months versus 12 per cent who plan to cut back. Plans for wage increases remain at 1.6 per cent, but pricing plans have risen to 2.0 per cent--likely on account of the weaker Dollar and the higher cost of imports.

The full report, prepared by Ted Mallett, CFIB Vice-President & Chief Economist, is available on the CFIB website.