Nearly one-third of Canadian businesses are unsure how long they can continue operating at current levels of sales and expenses before cutting staff or shutting down, according a Statistics Canada survey published Friday.
For nearly one-fifth of business owners, there is a clear timeline on when they would start to consider such measures: six months or less. The distress is highest in the arts and hospitality industries.
Statscan conducted its survey between mid-September and late October, overlapping with the implementation of tighter restrictions in Ontario and Quebec to tame a second wave of COVID-19. The results highlight the precarious state that many businesses find themselves in, despite historic amounts of financial support from the federal government.
“As pandemic-related restrictions were gradually lifted throughout the summer, the business climate began to improve slightly,” Statscan said. “Nevertheless, challenges remain, especially in light of the resurgence of COVID-19 and a return to partial shutdowns in several provinces.”
Company revenues have taken a big hit. Nearly one-third of businesses said their sales in August were down 30 per cent or more compared with the previous August. And for many, the outlook is shaky. Around 36 per cent of companies do not expect their sales to increase over the next three months relative to the previous three months, while another 28 per cent were uncertain.
A winter chill could extend to hiring: About three-quarters of companies expect their number of employees to remain the same over the next three months. Ten per cent expect a decrease in workers, with higher pessimism in arts and hospitality. Nearly 50,000 positions were eliminated last month in the accommodation and food services sector, largely in Quebec.
Despite the sales disruption, around three-quarters of companies had enough cash or liquid assets on hand to operate. Since the pandemic began, the federal government has delivered billions of dollars of support to the business community via zero-interest loans, wage subsidies and rent relief. Many programs are slated to extend into 2021.
However, 44 per cent of businesses said they are unable to take on more debt, with restaurants and hotels especially at their limits.
While business insolvencies have declined during the pandemic, 5 per cent of companies are actively considering bankruptcy or closing, Statscan said.
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