Alberta business confidence index increases for the fourth month in a row, reaffirming business owners’ optimism for economic future

December 15, 2009 — The Alberta Business Confidence Index increased for the fourth month in succession to 109 points in November, after crossing the 100 mark in May 2009, according to the Business and Consumer Confidence Index from PricewaterhouseCoopers (PwC) and Leger Marketing. In fact, November results reaffirm that Alberta business leaders and consumers continue to be optimistic about economic conditions as they head into the New Year.

• The future unemployment index remains steady at the September 2009 level (116), indicating businesses increased optimism in the job market. The unemployment index has grown by 91 points in 2009 (25 in January to 116 in November).
• Another optimistic sign for the economy: the future interest rate index continues to decrease (73 in July, 64 in September and 52 in November), reflecting a perception that with economic revival, interest rates are likely to increase again.
• The current business conditions measure maintains an upward trend, with a notable increase in November, a strong indicator that business owners are restoring confidence in the current conditions as well as for the future (from 47 in July, 96 in September to 114 in November).

“These figures are a good indicator that many of Alberta’s businesses have endured during the tough economic conditions and are feeling more confident in their current outlook and in Alberta’s business prospects for the coming year,” says Ian Gunn, partner and leader of PwC’s Private Company Services practice in Alberta. “Although the Bank of Canada has once again stated that interest rates will remain flat until Summer 2010, the future interest rate index suggests that both businesses and consumers expect that lenders will raise rates in the face of an improving economy.”

Indeed, Alberta consumers are also reflecting similar sentiments as business leaders with the Consumer Confidence Index attaining a steady value of 111 in November 2009 after a marginal dip in September. Overall, 2009 ends with improved consumer confidence (111 in November) compared to the beginning of the year (103 in January).

As well, for the first time since May 2008, confidence in the future job market crossed the 100 mark as the future unemployment index continued its increase from 97 in September to 106 in November.

With the perceived upswing in the economy, consumers also anticipate a likely increase in interest rates. This sentiment is reflected in the stabilization of the future interest rate index (65 in September, 63 in November), following a continuous decline since January of this year.

However, consumers are showing some caution in projecting future household income. The future household income index remains steady (119 in September, 117 in November).

“Overall, consumers are optimistic about the job market. Consumers continue to see these times as a good opportunity to buy homes and other major purchases, although to a lesser extent than in the previous quarter,” says David J. Bryan, Advisory partner and leader of PwC’s Private Company Services practice in Edmonton. “With signs of economic revival and potentially a real estate recovery, consumers may become less enthusiastic about purchasing a house in the future.”

For more information, please visit www.pwc.com/ca/doingbusinessinalberta.