Every Friday, we publish a weekly update on COVID-19 and its effect on business.
Andersen Monthly Economic Report – June 2020
Dr. Peter Andersen – former assistant chief of the Bank of Canada’s research department – provides valuable economic insights to help TEC members make better business decisions. June’s edition of the Andersen Monthly Economic Report indicates that the U.S. and Canadian economies can exist with COVID-19 and another absolute lockdown is highly unlikely. Indicators predict the U.S. recession is over – and although gradual – the Canadian economy is beginning to rebound. Direct business sector surveys in Canada reveal that reduced spending on travel and dining-out has created opportunities for housing-related retailers and producers (hardware, building materials, electronics, etc.).
Although some international nations – such as Russia, Latin American countries and India – continue to show an unfavourable trend of new COVID-19 infections, most advanced industrial countries have economies that can successfully coexist with the virus.
Key takeaways from the report include:
- The Canada Mortgage and Housing Corporation’s (CMHC) forecast for a double-digit housing price decline is misleading. New homes sales surged at the start of 2020 and buyers are not backing out of deals. For some builders, weekly sales in May and June were stronger than expected and showed price increases.
- Encouraging COVID-19 numbers from Atlantic Canada, B.C., and Alberta – with Ontario and Quebec following with a lag – show that employment and spending are restarting and will continue to gain momentum throughout the summer and onward.
TEC Canada is pleased to provide the full Andersen Monthly Economic Report exclusively to our members. If you’re a TEC member, read the full report here. Not part of our community? Explore the power of a TEC membership here.
Business Outlook Survey – Summer 2020
Four times a year, the Bank of Canada’s regional offices interview business leaders from Canadian firms to gather a broad range of economic perspectives. The most recent outlook survey and Canadian survey of consumer expectations preface the Bank of Canada’s next interest rate announcement and monetary policy report on July 15. Per CBC, the central bank is expected to hold its key interest rate at 0.25 percent, while the monetary policy report will include an update to its economic forecast.
Insights from the central bank’s summer 2020 business outlook survey include:
- Companies that have laid-off employees plan to refill some positions throughout the remainder of 2020, but many hiring initiatives are paused due to uncertainty related to COVID-19.
- Many businesses in the service and energy sector don’t anticipate returning to pre-COVID-19 levels of employment.
- Approximately one-third of business leaders surveyed said they used a federal wage subsidy to reduce or avoid layoffs
- As of June 29, the $45-billion wage subsidy has paid nearly $17.1 billion to 245,160 Canadian companies. Additionally, the Canada Emergency Response Benefit has paid $53.53 billion in benefits to 8.16 million Canadians.
For further insights, view the full results from the Bank of Canada’s Business Outlook Survey here.
Finance Minister Bill Morneau Provides Federal Fiscal “Snapshot”
On July 8, Finance Minister Bill Morneau provided a federal fiscal ‘snapshot’ to the House of Commons.
CBC’s highlights from the report include:
- The deficit for 2020-21 is expected to rise to $343.2 billion from the $34.4 billion deficit projected before the pandemic.
- A big chunk of that additional deficit can be attributed to the $212 billion in direct support measures the federal government is providing to individuals and businesses.
- The snapshot says that, aside from the pandemic program spending, the economic slowdown is estimated to have added another $81.3 billion to the deficit in 2020-2021.
View the entire 2020 Economic and Fiscal Snapshot here.
While the coronavirus continues to spread quickly, it is important to remember that only a small percentage of patients need special treatment to recover. Trusted health experts continue to emphasize that the general population shouldn’t panic and should instead focus on practicing proper hygiene, such as hand-washing and refraining from touching the facial area.