More than 85 per cent of Canadian small and medium-sized businesses are ready to deploy cash for capital expenditures, or to at least maintain their current spending rate, according to the second semi-annual survey by HSBC Holdings PLC.
The findings come despite renewed fears that the global economy may not grow as quickly as first hoped. Although the economic downturn officially ended a few quarters ago, the recovery has been shaky and companies have hoarded cash while they wait for signs of stability.
HSBC's survey indicates the reluctance to spend is waning and Canadian small businesses are feeling confident enough to loosen the purse strings for capital investments.
The same isn't true for new hires. Three-quarters of the Canadian businesses surveyed, 80 per cent of whom have no more than 10 employees, do not plan on changing their hiring plans before the end of the year. That doesn't bode well for the Canadian unemployment rate, which edged back up to 8 per cent on Friday, because small businesses comprise the vast majority of Canadian companies.
Small businesses also have a significant effect on the Canadian economy. On that front, there are promising signs. More than 60 per cent of the Canadian companies surveyed expect local GDP growth to maintain its current pace, and only 10 per cent anticipate a slowdown.
In total, HSBC's study examined more than 6,000 small and medium-sized businesses around the world. Companies in emerging markets displayed the highest confidence levels, but developed markets, including Canada, have seen business confidence rise in the past six months.