The Bank of Canada says that business sentiment has fallen to its lowest level since the 2008-09 recession as sales slow and uncertainty remains high about COVID-19 and future growth.
The business sentiment findings are based on a survey of executives released by Canada’s central bank, which polled businesses between May 12 and June 5 to gauge sentiment during the global pandemic.
The results show that even as provinces begin to reopen their economies, many businesses are still struggling with weak demand. Companies reported growing slack in capacity, easing price pressures and collapsing forward-sales expectations.
The composite gauge of sentiment declined to -7 which is the lowest level since the financial crisis of 2008-09. Even though businesses have experienced a sharp drop in sentiment from the pandemic, many expect a recovery within the next 12 months. About half of firms anticipate that their sales will recover to pre-pandemic levels within the year.
Despite the plunge in sentiment, firms are less pessimistic than during the financial crisis. That’s due, in part, to government support buffering the economic fallout and the expectation for a fairly quick rebound in operations, according to the survey.
The survey found that almost half of all Canadian businesses reported a decline in sales in the past 12 months because of COVID-19, lower energy prices and heightened uncertainty; a majority of firms that laid off workers have plans to refill at least some of the positions in the next 12 months; and more than half of firms expect their sales and employment levels to be near pre-pandemic levels by the second half of 2021.
