OTTAWA (Reuters) - Canadian firms in the accommodation, food services and recreation sectors have already seen demand collapse during the coronavirus outbreak while other sectors are still bracing for a looming economic hit, a special Bank of Canada survey showed on Monday.
Canada’s central bank said it called 52 firms and 11 industry organizations between March 13-17 as part of a special consultation to better understand the quickly evolving economic impacts of COVID-19.
“The impact of the shock on firms was still escalating, with some firms seeing very recent sharp declines in demand and others only expecting them,” the Bank said.
The Bank of Canada slashed its key overnight interest rate three times in March to 0.25% as it tries to shield the Canadian economy from the impact of the coronavirus outbreak and slumping oil prices. It’s next interest rate release is set for mid-April.
Non-food retailers reported “a dramatic drop in foot traffic” and said they were scaling down their operations due to declining cash flow, the bank said, while some manufacturers said they expected reduced demand from challenged customers and were anticipating temporarily shutting down their operations as well as reducing their workforce.
Other firms, like those tied to housing construction, said they had not yet been affected by the coronavirus shock, although most respondents “indicated significantly more uncertainty about the demand for their products and services,” the survey showed.
Grocery retailers and related transportation services noted their sales had reached unprecedented levels. Grocery stores also said they had not had significant issues with their supply chains.
Meanwhile, a separate special survey by the central bank of energy companies on the impact of low oil prices found most businesses view the current price shock as worse than declines seen in 2008 or 2015 as access to financing has been more difficult. The survey of 27 oil and gas companies was conducted between March 12-18.
In a separate release, results of the central bank’s traditional quarterly business survey found business sentiment had softened in most regions even before concerns around the coronavirus outbreak had intensified in Canada, with confidence slipping the most among firms in energy-producing areas. The regular business survey of about 100 firms was conducted from Feb. 11 to March 6.
Reporting by Kelsey Johnson; Editing by David Gregorio