Half of businesses say they do not know how long they can keep operating at their current level of revenue

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Canadian businesses are still wracked with uncertainty even as the end of the COVID-19 pandemic seemingly draws nearer, with consumer demand, cash flow and future survival among their biggest concerns.

Statistics Canada on Friday reported findings from its latest survey of business conditions, which was conducted from Jan. 11 to Feb. 11, and which asked firms about their expectations over the next three months.

“Businesses are concerned with future survival and expect to face a variety of obstacles in the short term,” StatsCan noted.

Three biggest worries are the blows to the economy, the debt they’ve accrued and concerns about whether customers will come back

Among other findings, around one-third of businesses said they expected fluctuations in consumer demand or insufficient demand to be problems in the coming months, figures that were little changed from StatsCan’s previous survey of conditions in September and October.

Approximately one-quarter of firms also said they saw rising input costs, maintaining sufficient cash flow or managing debt and finding and keeping skilled employees to be obstacles going forward. Those numbers were up slightly from the fall.

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Meanwhile, just over half of all businesses told StatsCan they did not know how long they could keep operating at their current level of revenue and expenses before considering bankruptcy or closing. One-tenth of firms said they could continue for less than 12 months.

When it came to layoffs, 46.4 per cent of businesses said they didn’t know how long their status quo could continue before they would consider reducing staff, while 21.3 per cent reported it would take less than a year.

StatsCan’s findings show that, even with the light at the end of the pandemic tunnel growing brighter, businesses still aren’t entirely sure what to expect. Moreover, the end of the pandemic could usher in its own set of unique challenges, such as larger debt burdens and changing consumer behaviour that could become permanent.

“The uncertainty remains,” said Corinne Pohlmann, senior vice-president of national affairs for the Canadian Federation of Independent Business, in an interview. “The lockdowns remain in certain parts of Canada still. Where there aren’t lockdowns, there are still pretty heavy restrictions in many areas. And then with the (COVID-19) variants, and the lack of vaccinations at this point, I think the short-term outlooks are not very good.”

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StatsCan’s findings are pretty well aligned with what the Canadian Federation of Independent Business is hearing from its members, Pohlmann said, making it important to keep government support programs, such as the federal wage subsidy, in place. Among CFIB’s membership, three of the biggest worries coming out of the pandemic are the blows to the economy, the debt they’ve accrued and concerns about whether customers will come back, she said.

CFIB’s most recent barometer of business sentiment did see optimism improving for the coming 12 months, but attitudes for three months ahead were “fairly muted,” according to Pohlmann.

StatsCan found earlier this year that 30.6 per cent of all businesses expected their sales would decline over the next three months, down from the 36.4 per cent of businesses in the fall that did not anticipate their revenues rising. Profitability in the short run is also expected to take a hit, as 41.8 per cent of companies told StatsCan for its most recent survey that they foresee their earnings shrinking.

However, industries that have been particularly hard-hit by lockdowns and public-health restrictions, such as the restaurant business, are reporting tougher times. According to StatsCan, 49.2 per cent of businesses in accommodation and food services see their sales slipping in the near term.

Whereas 10.3 per cent of businesses said they could keep going for less than 12 months at current revenue and spending levels before considering closure or bankruptcy, StatsCan said that for those in the accommodation and food services sector it was 24.9 per cent. Those sorts of businesses could again face disproportionate levels of pain if there is another economic setback.

“If restrictions are lifted too quickly and the spread of the virus accelerates, provinces will be left with no choice but to close parts of the economy again,” Toronto-Dominion Bank economist Sri Thanabalasingam wrote this week. “This could slow the speed of the recovery.”

• Email: gzochodne@nationalpost.com | Twitter:

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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Canadian businesses still worry about survival even as the pandemic’s end draws closer

2021-03-05 22:01:52

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