Good afternoon. Thank you, Mr. Chair.
CFIB takes great interest in these kinds of issues. We've been tracking small-business performance and economic performance in the segment for almost 25 years, and for almost ten years we have done it on a quarterly basis. About a year ago we started tracking our members' perspectives on how they are performing in the economy, how the economy is affecting them. We are now doing that on a monthly basis, and all our information is coming out on the first Wednesday of each month.
We're sharing some of the information we have from our most recent survey, which we released in the early part of October, and next week our November numbers are going to be released. We encourage you to go to our website and we can put you in touch with the numbers as they come out. It's very insightful.
What we've found over the years is that the small-business sector has been one of the most important stabilizers in the Canadian economy over time from a macro basis. From a micro basis, of course, a lot of churn goes on. Businesses going in and out of business are a regular part of the process and the entrepreneurship world, but certainly when we are dealing with financial crises like the past year—really beginning in September 2008—it affected individual small firms to a large degree. What surprised many people is the degree to which the small-business sector as a whole has helped keep the Canadian economy afloat as much as possible.
At least until about February or March, we have seen employment gains made throughout the small-business sector as well as into part of the medium-sized business sector. Virtually all the net job losses in the economy that took place in the early part of the recession were in the large manufacturing businesses with more than 1,000 employees. The small-business sector was at least holding on. A lot of those people were changing jobs within the small-business sector, but at least the sector as a whole was keeping the economy afloat.
These sorts of things we have seen before. The 1990 recession was probably the worst from the small-business point of view because it was coupled with the complete withdrawal of financial sector help in many cases. This time around, we saw a much more appropriate response from the banking industry. Many businesses were able to hang on to their lines of credit or at least maintain them.
We saw some pulling back, but to a large degree that was based on the businesses themselves pulling back. They went into an ultra-conservative financing mode and they were able to survive based on the kinds of cashflows they had. There were reduced cashflows, but they were not overextended on their credit, which allowed them to survive. We think this is one of the more significant events of this most recent recession. We also saw this back in the tech bubble burst of 2000. The small-business sector really prevented the Canadian economy from going into recession when the U.S. economy did.
Certainly the aftermath or the recovery after 9/11 was largely fueled by the small-business sector growing, as opposed to the large firms. We have many cases where the small-business sector has been the automatic stabilizer to some degree at the expense of many small-business owners who have had to shut down their businesses, but many other businesses were growing and starting up at the same time, which is just the nature of entrepreneurship.
If I can turn your attention to the “Business Barometer” report, you can see we do have a monthly indicator of business sentiment. We ask our members what the outlook for their particular businesses are over the next year, and you can see that it tracks GDP very closely. Again, we've had 20 years of experience in seeing how their performance mirrors the GDP, and it does a pretty passable job in that respect.
We also look at some of the other indicators. We're looking at things like new orders, inventory change. We're still seeing a net negative, more people saying things are worse than they should be or below normal compared to those who are saying things are above normal. We're certainly not out of the woods in terms of how the economy is performing. We're also looking at indicators such as capital investment and so on. Since February, when we started asking these particular kinds of questions, we've seen an improvement. We've always known that capital investment spending in small firms is a very stable indicator. It does not move much from month to month.
When a business owner needs a new truck or when they need a new computer, they have to buy that computer. It's not something they can plan out many years in advance, unlike a lot of sort of large capital-intensive industries. So we do see that there's an improvement that may not look large, but it is significant in this area. Of course we'll be interested in seeing what these indicators look like over the next couple of months, because we believe the recovery is taking hold in the marketplace.
Apart from that, we're able to answer any particular questions on the economy, but Dan is going to speak a little bit about some of the policy issues we're addressing right now.