A new report from the Canadian Federation of Independent Business suggests business optimism on PEI continues to be the lowest in country.

Erin McGrath Gaudet - custom

Employment Insurance changes, the HST, and low lobster prices are all having an impact on the P.E.I. economy, says Erin McGrath-Gaudet. (CBC)

The federation's business barometer index for P.E.I. in September was 47.6, well below the national index of 64.5. The next worst index was New Brunswick's, at 55.5. An index level below 50 means business owners expect weaker performance in the coming year.

Erin McGrath-Gaudet, the federation's director of provincial affairs for P.E.I., said a number of factors have come together on the Island to drag confidence down, both in the public and the private sector.

"We have seen low prices in our fisheries this year. So that would be one concern," said McGrath-Gaudet.

"Also we have seen a lot of changes both at the federal and provincial government level that are working their way through the economy right now."

Changes to employment insurance have taken money out of the provincial economy, she said.

"Whether you agree with the changes or not, certainly taking some of that money out of the economy that we would normally see does have an impact," said McGrath-Gaudet.

"I would say we're seeing the same with the HST. There will be benefits, but those are more long-term benefits to it, and right now consumers are certainly seeing less money in their pockets and that has an impact as well."

The federation says 28 per cent of Island business owners say their businesses are doing well, but another 28 per cent say their firms are performing poorly.

Newfoundland and Labrador, Alberta and Saskatchewan lead the country in terms of small business confidence.