Widespread negative business sentiment caused by the effects of the COVID‑19 pandemic is reflected in a sharp fall in the Bank of Canada’s Business Outlook Survey indicator, which dropped close to the trough experienced during the 2007–09 global financial crisis. 

“Since the previous survey, conducted before concerns around COVID‑19 had intensified but as oil prices had already started to fall, business confidence across all regions has generally declined,” said the Bank in releasing its survey on Monday.

“Indicators of employment intentions, input price growth and credit conditions did not deteriorate as much as they did during the 2007–09 crisis. This is due partly to the government support offered to mitigate the impacts of the pandemic. This also reflects that many firms expect a fairly quick rebound in operations after a temporary decline in sales, unlike the 2007–09 crisis when businesses anticipated persistent weakness in demand.”

The Bank said nearly half of all businesses reported an outright decline of their sales in the past 12 months because of the impacts from COVID‑19, low energy prices and associated elevated uncertainty. 

“As the effects from the pandemic continue, firms expect slower sales growth ahead. More than half of all businesses anticipate their total sales over the next 12 months will be lower compared with the past 12 months. These expectations are backed by a sharp deterioration in indicators of future sales (such as sales inquiries and order books),” it said.

“Now at a record-low level, future sales indicators are suggesting a notable decline in sales growth in the near term. Softer sales expectations are widespread across all regions and sectors, with firms often expressing a high degree of uncertainty about consumer behaviour and future demand. Weakness is most prevalent among firms in tourism-dependent, finance and real estate industries as well as those linked to commodities, particularly energy. However, many businesses expect the weakness in their sales to be temporary and not extend over the entire 12-month period ahead. Half of firms anticipate that their sales will mostly recover within the next year as pandemic-related impacts recede. Most of these businesses either reported a drop in their past sales or expect future sales to be lower, but not both.”