Photo: Darryl Dyck, The canadian Press
Only 15% of businesses, especially manufacturing, are expecting a recovery in almost all of their sales in the next 12 months.
If the post-COVID-19 remain dark, the degree of pessimism does not reach the level of 2007-2009. It is clear that many companies did not foresee a return to the employment levels before the pandemic, while the concern of the workers regarding their employment remains high.
The Bank of Canada on Monday released the results of the summer edition 2020 of the Survey on the business outlook. The interviews were conducted from mid-may to early June, while started the déconfinement progressive and the lifting phase-in restrictions. It should be noted that uncertainty remains high and fears, palpable, but that the government action has helped reduce the degree of pessimism, compared to the level observed in the wake of the 2008 crisis.
“Business confidence is passed in negative territory, under the effect of the impact of the pandemic,” can we read. The indicator for the survey recorded a “sharp drop,” which has almost reached the lows of the global financial crisis of 2007-2009 “. In addition, ” indicators of hiring intentions, growth in the price of inputs and credit conditions have not deteriorated as much as in 2007-2009, thanks in part to government assistance offered to mitigate the impacts of the COVID-19. This is due also to the fact that many companies are predicting a rebound fast enough after a decline in passenger sales, unlike the 2007-2009 where the companies were anticipating a persistent weakness in sales “.
Still, nearly half of the respondents reported a net decrease in sales over the last 12 months. And more than half anticipate that their total sales next 12 months will be lower than the last 12. Expectations for sales are low, especially among businesses that depend on tourism, businesses in the fields of finance and real estate and those related to commodities, particularly energy, adds the institution. Also, half of exporters expect a decline in their foreign sales in the next 12 months.
Conversely, around 40 % of respondents say that their sales should recover completely within a year or that the COVID-19 has not hurt their sales. These companies also intend to reduce their workforce close to what they were before the pandemic within a year. Approximately 15% of the enterprises, especially manufacturing, are expecting a recovery in almost all of their sales in the next 12 months.
The impact will be felt on the investments, the respondents referring to a considerable reduction in this chapter. “The companies cite reasons related to the pandemic or the decrease of the domestic demand, the restrictions on exports and concerns about their balance sheet […]. Those who plan to raise their investments, say particularly want to support their digitization strategy or improve productivity, citing sometimes the transition to telework. “
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The pandemic will also have an effect on hiring. Thus, more than half of the companies that have recently made layoffs talk of reopening some of the positions in the next 12 months. But many are not planning to increase their workforce, often because they fear low sales. “The proportion of firms reporting shortages of labour that restrict their ability to meet demand has declined sharply […]. These results suggest a generalized increase of the margin of unused resources. Several respondents indicated that they would not have trouble filling positions as needed with the widening of the pool of labour available from the beginning of the pandemic. “
Especially as the pressures on production capacity remain quite present. “The majority of companies say they don’t run at full speed because of the collapse in demand caused by the pandemic. Most say that they would be able to return to normal production in the month following the end of the déconfinement. “
And if one-third of the respondents have argued that the wage Subsidy emergency of Canada has helped to limit or avoid layoffs, a few have noted, however, that the Delivery of the canadian emergency their complicated the task to keep their employees or hire new ones, is continuing the Investigation.
This great hesitation is also reflected in the workers. In a separate study focusing on the expectations of the consumers in the second quarter, carried out between 11 may and 1 June, their opinions as to the conditions on the labour market has deteriorated compared to the previous quarter. The probability of job loss indicated by the respondents ” reached a peak unprecedented in the history of the investigation “. The to find a in case of loss of the main job increased from 50% to 40%, ” the lowest rate since the shock of the oil price in 2015 “.
Result is a weakening of expectations of wage growth over the next 12 months, the anticipated growth amounting to 1.9 %. Those relating to the growth in household income have reached a historic low. And the responses received seem to indicate a deterioration of access to credit in the second quarter “.
Consumers will play it safe. The quarterly survey shows an expected reduction of more than 30 % of spending on travel accommodation and transport, of more than 25 % in the cost of meals at the restaurant, to the cinema and other recreational and social activities, and almost 20 % in durable goods. In contrast, respondents expect to spend more in health and personal care, costs of housing and groceries.