BC small business investment expected to decline in 2017, as national numbers rise

2017 is looking like a good year for small and medium business investment in Canada. According to the Business Development Bank of Canada’s (BDC) annual report, small and medium sized Canadian businesses are predicted to invest $96.6 billion this year. That’s a 1.6% increase over last year.

Technology companies are especially optimistic with average investment intentions up 41% over 2016. Manufacturing firms are also forecast to increase their investment by 17% this year

Planned investments in Alberta are expected to rise 17.1% this year, while Ontario and Quebec may get more modest increases at 2.9% and 0.6% respectively. Atlantic Canada should hold steady while the prairies are expected to take a 17.9% hit to investment intentions.

Despite the rosy national numbers, BC and the territories are predicted to see reduced investment by small and medium businesses this year.

“Business owners are more confident in the economy this year compared to last year. In British Columbia, 73% of businesses believe they are going to have higher revenue this year compared to last year. But at the same time, their investment intention is a little bit down.”

A decline of 5.4% is expected. Cleroux says high levels of investment in previous years are likely a big factor in businesses cutting back this year.

“Investment intentions in British Columbia last year were very high. As a result, this year, people are not investing as much just because they invested a lot last year. Over the last few years, businesses in BC have been investing a lot more than in any other part of the country.”

However, 49% of business owners in BC cited difficulties finding qualified staff as a primary reason for not investing.And while confidence in the economy remains high, Cleroux says there’s a lot of uncertainty regarding the state of the softwood lumber industry.

“Lumber export has been very strong for British Columbia over the last few years as the US housing market is coming back. The big unknown is what will happen with the lumber deal between Canada and the US. The market is very strong and the dollar is helping so that’s the very good news but, of course, we are concerned about how the new agreement between Canada and the US in lumber is going to be finalized.”

A slight cooling of the BC real estate market, especially in the Lower Mainland, is also considered a factor.