(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

COVID-19: Uptick in calls to Haven Society crisis line as restrictions ease

Organization reminds people of their range of services

Proposed $2.5-million renovation at Dover Bay secondary would increase school’s capacity

Nanaimo Ladysmith Public Schools to submit draft concept plan to Ministry of Education by Aug. 1

Nanaimo Art Gallery announces new executive director

Former Prince George gallery director Carolyn Holmes to take on role

School district reveals restart plans for Nanaimo-Ladysmith

K-5 students will see two days of instruction a week, 6-12 students once a week

LETTER TO THE EDITOR: No government interested in paying for rail right now

Rail advocates are ignoring the basic problem of affordability, says letter writer

11 new COVID-19 cases in B.C. as top doc urges caution amid ‘encouraging’ low rates

Dr. Bonnie Henry also announced that two care home outbreaks would be declared over

Stolen gargoyle returns to its perch in Nanaimo’s south end

Petey, a concrete gargoyle statue, was returned by police after City of Nanaimo crew found it

Dr. Bonnie Henry announces official ban on overnight kids’ camps this summer

New ban comes after talking with other provincial health officials across the country, Henry says

RDN Transit to see rollout of 15 new HandyDart buses

Buses will have temporary protective barriers installed to prevent spread of COVID-19

Facing changes together: Your community, your journalists

The COVID-19 pandemic has changed the world in ways that would have… Continue reading

VIDEO: NASA astronauts blast off into space on SpaceX rocket

Marks NASA’s first human spaceflight launched from U.S. soil in nearly a decade

‘I knew what he wanted’: Kootenay man spends hours in tree as black bear patrols below

Francis Levasseur is no stranger to the outdoors, but a recent run-in with a bear caused quite a scare

Senior man in hospital after unprovoked wolf attack near Prince Rupert

Conservation officers are on site looking for the wolf

PHOTOS: U.S. cities brace for increasing unrest over police killing of George Floyd

Minnesota Gov. Tim Walz has fully mobilized the state’s National Guard

Most Read