(The Canadian Press)

Business outlook soft even before shock of COVID-19, Bank of Canada says

Over the last two weeks, more than two million people have applied for employment insurance benefits

The Bank of Canada says workers were feeling upbeat about job prospects, while employers felt otherwise in the weeks before COVID-19 delivered a shock to the Canadian economy.

The survey of consumer expectations suggests more people anticipated searching for a new job and expected they would quickly find something new, while fewer thought they would lose their jobs.

Household spending expectations continued to edge up faster than expectations for wage growth, which the bank says suggests consumers by mid-February weren’t becoming more cautious in their spending.

Then COVID-19 hit.

Over the last two weeks, more than two million people have applied for employment insurance benefits, a dramatic spike from what the program normally sees.

And starting today, Canadians who don’t qualify for EI will be able to apply for a new, $2,000-a-month emergency benefit the federal government expects to cost $24 billion.

The outlook for the rest of the year has seen an equally dramatic drop from just a few weeks ago, and the surveys from the Bank of Canada today provide a pre-pandemic picture of consumers and businesses.

Results from the business outlook survey suggest business sentiment had softened in most regions before the pandemic intensified.

Much of the business softness sentiment emanated from the country’s oil-producing regions where companies were generally less optimistic, pulling back on capital spending and hiring plans as they watched the price of oil fall.

Companies told the central bank they expected the economic shock from low oil prices to be worse than what hit the sector in 2015 and the 2008 economic crisis. As one data point, capital spending was being cut by 30 per cent compared with 2019.

The reason, the bank says, was over concerns that financing was becoming harder to come by for companies that were also anticipating “a bottoming-out in the sector rather than a negative shock.”

The survey also suggests oil companies foresaw few layoffs unless low oil prices persisted over a longer period.

The belief was the benchmark price for crude, known as West Texas Intermediate, would be between US$30 and US$35 a barrel. The price to start the week was closer to US$28 a barrel.

By mid-March, restaurants, hotels and other service industries had seen a collapse in sales, either closed or expected to soon, and were “drastically laying off staff or reducing staff hours in line with operations.” Others, the bank noted, were moving to food delivery and online sales to find new ways to earn money.

Manufacturers were anticipating temporary shutdowns and declining sales from challenged customers.

Grocery retailers and related transportation companies saw their sales reach “unprecedented levels” as workers were being told to stay at home.

The Canadian Press


Like us on Facebook and follow us on Twitter.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Abbotsford International Airshow opening 50-year-old time capsule

Bronze time capsule was put together to commemorate AIA as Canada’s National Airshow

Rainfall records fell in deluge Saturday across the Fraser Valley

The steady rain broke the May 30 record in Chilliwack for rain with one day total of 31.7 mm

Abbotsford’s UFV gym now without a sponsor

Partnership with Envision Financial ends, school seeking new organizations to partner with

Road washout affecting section of Highway No. 3 near Manning Park

Road maintenance crews are on the scene, with an almost two kilometre long stretch impacted

CBC Bearcats hire Rebecca Garner as women’s volleyball head coach

Abbotsford-based team hires former Bearcat, Briercrest star to lead program

VIDEO: Injured bald eagle rescued in B.C. First Nations community

Bird suspected injured in fight, whisked off to Coquitlam rehab

Facing changes together: Your community, your journalists

New platform allows readers to make a one-time or ongoing donation to support local journalism

Love flourishes at Peace Arch Park, but COVID-19 concerns loom

South Surrey park becomes only place for international couples to meet

UPDATE: B.C.’s Central Kootenay issues evacuation orders for hundreds of residents due to flooding

An evacuation alert covers all areas except the Cities of Castelgar and Nelson

PHOTOS: Thousands gather at Vancouver Art Gallery to protest racism

Rally is in response to the deaths of black Americans and a Toronto woman

Number of students returning is a wild card as B.C. schools reopen Monday

A common model will see other teachers work four days a week in class then the fifth remotely,

Human Rights Tribunal denies church’s request to toss out White Rock Pride Society’s complaint

Star of the Sea and White Rock Pride Society to go to Human Rights Tribunal hearing

Most Read