Confidence among Canada's small and medium-sized business owners fell to a three-year low in July, according to an index compiled by the Canadian Federation of Independent Business.

The CFIB said Wednesday confidence in economic conditions among its members nationally dropped for the fourth consecutive month, falling by 1.2 per cent to 60.9.

The last time it was lower was in July of 2009, when it stood at 58.6.

“In addition to the continuing difficulties in Europe and the sluggish recovery in the U.S., elevated household debt levels in Canada will keep personal spending growth in check in the near to medium term,” said Jacques Marcil of TD Economics, “limiting economic prospects for Canada.”

The CFIB says confidence declined in July even in resource-rich provinces like Alberta, which saw a drop of three points to 70.3.

Saskatchewan most confident

Saskatchewan businesses were the most confident in the country with an index reading of 72, while those in Prince Edward Island and Nova Scotia were at the low end at 52.7 and 54 respectively.

Retailers were the most pessimistic, with confidence there down significantly by 7.2 points to 58.1, while the outlook of business owners in manufacturing, natural resources and financial services remained much higher than the average.

Based on past results, the CFIB says index levels normally range between 65 and 75 when the economy is growing.

On Tuesday, Statistics Canada reported the economy had grown a disappointing 0.1 per cent in May, leaving the pace of the recovery at slightly below two per cent on an annualized basis.

Still, there was a positive sign in terms of employment plans by business owners, Twenty per cent of respondents plan to hire full time staff over the next three to four months. This is higher than usual for the middle of the summer.

The findings are based on 839 responses, collected in a random sample of CFIB members, and have a margin of error of 3.4 per cent.

With files from The Canadian Press