Remarks by Lawrence Schembri
Deputy Governor
Greater Saskatoon Chamber of Commerce
(by videoconference)
June 18, 2020
Living with limits: household behaviour
in Canada in the time of COVID-19
Introduction
Good morning. I hope you are all well in Saskatoon. I very much regret that I
cannot be with you in person today. The COVID-19 pandemic has disrupted all of
our lives-unfortunately, some more severely than others. And because of this
pandemic, we are all living with limits on our behaviour.
One of the things I enjoy most about giving public speeches as a Deputy
Governor is having the opportunity to visit different towns and cities throughout
Canada and especially to meet people like you. I very much like listening and
learning about your businesses and the local economy and discussing the Bank
of Canada, our economic outlook and our policies. We are fortunate to be living
at a time when technology can make some of this experience possible even
under the current circumstances.
Collecting your views will be most helpful today because I want to talk about the
impact of the virus and the related containment measures on the day-to-day
behaviour of Canadian households. Specifically, I would like to examine how
spending patterns for goods and services and for housing have changed. I'd also like
to discuss shifts we are seeing in household borrowing behaviour and indebtedness.
Analyzing the behaviour of Canadian households during the containment period
and the early stage of reopening will give us insights into how the economy might
perform in the future. In particular, we are interested in the speed, strength and
breadth of the pickup in economic activity during the recovery period.
Consumption and housing will be critical to the recovery because they normally
represent roughly two-thirds of economic activity in Canada.1
- 2 -
Household behaviour since the outbreak of the virus in Canada in mid-March has
been shaped by changes to both supply and demand. On the supply side, the
restrictions on the goods and services available for sale have changed what
Canadians are buying. On the demand side, the economic lockdown has had a
major impact on household income and confidence.
Fortunately, before the pandemic struck, the Canadian economy was in
reasonably good shape. Inflation was close to our 2 percent target and wage
growth was solid, consistent with an economy operating close to capacity and an
unemployment rate near a 40-year low.
This resilient starting point allowed Canadian authorities to respond with an
extraordinary set of aggressive remedial fiscal and central bank policies,
mitigating the negative impact of these forces on household behaviour. Fiscal
policies have helped replace lost income while the Bank's policies that focused
on reducing financial system stress have maintained low-cost access to credit.2
These policies have helped ensure households have the credit they need to
bridge this difficult time.
Containment and a two-phase recovery
Given this context, I would like to use this speech to explore and analyze three
main points, as illustrated by Chart 1:3
The recovery of economic activity and household spending will have two phases:
Chart 1:
reopening and recuperation
A D
Recuperation
C
C
Containment
Reopening
B
Time
First, household expenditures on goods and services as well as on housing
changed dramatically during the containment period, from A to B. Overall, the
- 3 -
level of spending fell, and its composition shifted. While most of this change is
likely temporary, some could persist.
Second, we are seeing signs of a partial bounce back in household spending in
the first phase of the recovery. This reopening, from B to C, happens as the
containment measures are relaxed. Households are now able to buy goods and
services that were not easily available during the containment period-I definitely
need a haircut! We are also seeing an increase in employment income and
household confidence as workers are rehired and economic activity picks up to
satisfy this rebound in demand.
Finally, we expect that the second phase of the economic recovery, from C to D,
will be a more gradual phase of recuperation, because the future evolution of the
virus and the economy remains highly uncertain. As well, the recuperation phase
could be bumpy as different provinces and sectors open up at different times. It
could also be slowed by an economy scarred by widespread firm closures and by
displaced workers, who may have to relocate or retrain to find employment.
As I discuss the road ahead for households, I will also examine how the Bank of
Canada's policy actions to support the recovery have complemented the
government's fiscal policy measures that have targeted vulnerable workers and
households.
Declining in tandem-household income and confidence
Before I discuss how spending has changed, let's consider two key
determinants-income and confidence. The pandemic and the resulting
economic shutdown, as well as the related decline in the global prices of oil and
other commodities, have had an unprecedented adverse impact on household
income. As they have in other countries, economic activity and employment in
Canada have fallen sharply, notably in sectors affected by physical distancing
(Chart 2).
- 4 -
Chart 2: Declines in employment were greatest in sectors most affected by physical distancing
Percent change between February 2020 and May 2020 (%)
0%
-10%
-4.0%
-20%
-9.9%
-16.4%
-30% -19.0%
-21.5%
-24.0%
-40% -28.0%
-30.5%
-50%
-60%
-70%
-63.0%
-80%
Employment Average hours worked Total hours worked
Sources: Statistics Canada and Bank of Canada
Last observation: May 2020
Since February, nearly 3 million jobs have been lost, and the average employee is
working four fewer hours per week. Together, this has resulted in a 25 percent decline
in total hours worked since February. The unemployment rate in May 2020 was worse
than that experienced during the 2007-09 global financial crisis, increasing to
13.7 percent. It would have been even higher had 1.2 million Canadians not left the
labour force due, in part, to their inability to search for work. What's more, job losses
were more pronounced among lower-wage workers, who typically have less savings
and less access to credit. That leaves them more vulnerable to this economic shock.4
Consequently, labour income fell in the first quarter, dropping sharply in March. The
level of labour income is estimated to have decreased by about 15 percent, or more
than $40 billion, in the first half of 2020 relative to its pre-COVID-19 level.
These negative effects on total employment income were largely offset by the
swift fiscal policy actions of the federal government, notably the Canada
Emergency Response Benefit (CERB) and the Canada Emergency Wage
Subsidy (CEWS).5 These programs were well targeted, as the income
replacement rates were the highest for the most vulnerable workers.6
4
Underemployment remained substantial, with the labour underutilization rate standing at roughly one-third
of the labour force (35 percent) in May, compared with 12 percent in February. This rate includes those who
were unemployed; those who were not in the labour force but wanted a job, although they did not look for
one; and those who were employed but worked half of their usual hours or less.
5
So far, the federal government has disbursed $43.5 billion in income support to households through the
CERB, helping 8.4 million applicants. Another $13.3 billion (as of June 15) has been paid to firms through
the CEWS to support the wages of employees. Other fiscal measures include a one-time supplementary
GST/HST credit payment and an enhanced Canada Child Benefit. Partly because of these government
transfers, household disposable income increased 1.7 percent in the first quarter.
6
Income replacement is expected to differ significantly across sectors. For workers in accommodation, food
and retail trade, the income replacement rate is expected to be, on average, about 100 percent, while it will
be much lower for workers in sectors such as construction or manufacturing.
- 5 -
Household confidence has also declined across regions because of the elevated
uncertainty about the evolution of the virus and its economic impact (Chart 3).
The decrease in incomes, in consumer confidence and in the willingness of
shoppers to leave their homes all led to much weaker household spending.7
Chart 3: The virus outbreak led to a sharp drop in consumer confidence across regions
Index: 2014 = 100
Index
180
160
140
120
100
80
60
40
20
May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20
Ontario Atlantic provinces Prairies
Source: Conference Board of Canada Last observation: May 2020
Falling consumption and shifts in spending
Consumption during the containment period was considerably affected by the
impacts of the pandemic on household income and confidence. However, even
before the pandemic hit our shores earlier this year, there was increasing
evidence that consumption growth was slowing as households were becoming
more cautious, perhaps because of elevated debt levels and a somewhat less
robust economy.
When the containment measures were imposed in Canada in mid-March, many
households had to suddenly prepare for a prolonged stay inside their homes to
reduce their exposure to COVID-19. As a result, spending habits changed
significantly.
In particular, household consumption was affected by the reduction of goods and
services available for purchase. Many non-essential stores and restaurants were
forced to close, while others had only online access or takeout service.8
These demand and supply effects not only lowered consumption during the
containment period but also changed what Canadians were buying.
The volume of consumption, as measured by the National Accounts, plummeted
by nearly 9.0 percent in the first quarter of 2020 at an annual rate, and the
7
On the demand side, sharp declines in stock markets had negative wealth effects, and lower commodity
prices reduced Canada's terms of trade. Both factors also weighed on consumption.
8
According to a survey by Statistics Canada, 40 percent of retailers closed their doors in March, including
91 percent of clothing retailers. Most remained closed until recently. In contrast, grocery and pharmacy
stores remained open.
- 6 -
preliminary release for April indicates a further decline as nominal retail sales fell
15.6 percent (Chart 4).9
Chart 4: Retail trade activity declined sharply across Canada
Nominal retail trade deflated by provincial CPI for goods, index: April 2018 = 100
Index
110
105
100
95
90
85
80
75
Apr-2018 Aug-2018 Dec-2018 Apr-2019 Aug-2019 Dec-2019 Apr-2020
Canada Energy-intensive regions Rest of Canada
Note: The April 2020 value for Canada is a preliminary estimate.
Last observation: April 2020
Source: Statistics Canada
Consumption patterns during the early stages of the shutdown saw a boom in
demand for necessities. Many households stocked up on food, alcohol and
personal care products-creating the infamous runs on toilet paper, flour and
cleaning products. In the first week of March, sales of hand sanitizer rose
792 percent over the same week last year (Chart 5).
Sales of health and household cleaning items spiked in March
Chart 5:
%
52-week percent change
900
800
700
600
500
400
300
200
100
0-100
January February March April
Hand sanitizers Masks and gloves Soap Bathroom tissue
Note: Data are experimental and subject to revision.
Last observation: April 2020
Source: Statistics Canada consumer prices program, special tabulation
9
Survey results suggest that 75 percent of Canadians reported they were spending less than before the
pandemic. On average, Canadians left home to go grocery shopping once a week, with 93 percent
indicating they stopped going out completely except for necessities.
- 7 -
But demand elsewhere was slumping, as larger-ticket items such as cars and
necessities such as clothing and shoes became more difficult to buy.10 Spending
on outside-the-home entertainment, restaurant meals, travel and personal
services came to a halt.
Indeed, the method of purchase became vitally important: sales of goods and
services that could be bought online soared by more than 40 percent compared
with last year, while those that required an in-person presence fell (Chart 6).11
Retail e-commerce increased markedly
Chart 6:
%
Year-over-year percent growth, non-seasonally adjusted data
50
40
30
20
10
0
-10
-20
2017 2018 2019 2020
Retail e-commerce Retail trade
Note: Retail trade series include NAICS 44 to 453.
Source: Statistics Canada Last observation: March 2020
According to our recently conducted Canadian Survey of Consumer Expectations
(CSCE), the full results of which will be released in July, more than half of
respondents (55 percent) reported their current spending was lower than before
the outbreak. Among those who had planned to make a large purchase before
the outbreak-such as a car, house or major renovation- the majority decided
to either delay, reconsider or abandon their purchase.
Overall, this decline in income and confidence led to lower household spending
and a dramatic shift in what and how Canadians were buying during the early
stage of the pandemic.
Measuring price pressures
These shifts in spending patterns have affected consumer prices. The sharp
deceleration in consumer price index (CPI) inflation over the past three months
from 2.2 to -0.4 percent is mostly due to the declines in the prices of gasoline,
traveler accommodation, and clothing and footwear as demand for these items
has decreased (Chart 7). In contrast, the price pressures on some consumer
10
Spending on clothing and footwear declined 50 percent at an annualized rate, while purchases of new
motor vehicles dropped by 29 percent in the first quarter of 2020.
11
Roughly 40 percent of Canadians have been doing more shopping online in the second quarter of 2020,
according to the Bank's Canadian Survey of Consumer Expectations (CSCE)-to be published on July 10.
They have also been prioritizing food delivery, with 26 percent of Canadians using food delivery services
such as Uber Eats and Instacart more often than before COVID-19.
- 8 -
goods, such as rice, toilet paper and household cleaning products, largely reflect
stronger demand.12
Chart 7: Inflation has reflected diverging demand trends across the CPI components
a. b. CPI components affected by higher
CPI components affected by lower
demand
demand
% Year-over-year percent growth %
Year-over-year percent growth
30
10
20 8
10
6
0
4
-10
2
-20 0
-30
-2
-40
-4
-50
-6
2017 2018 2019 2020
2017 2018 2019 2020
Food in stores
Clothing and footwear
Paper supplies
Gasoline
Household cleaning products
Traveler accomodation
Source: Statistics Canada and Bank Last observation: May 2020
Source: Statistics Canada and Bank Last observation: May 2020
of Canada calculations
of Canada calculations
These changing patterns also mean that the CPI, based on a fixed basket of
goods, became a less accurate gauge of the inflation rate Canadian households
were facing. Many households responding to our recent CSCE indicated that the
prices they were paying for goods and services were rising more than the
officially reported inflation rate.13
At the Bank, we want to better understand this difference between perceived and
measured inflation and are working with Statistics Canada to assess the impact
of these shifts in spending patterns on CPI inflation. Overall, the results indicate
that the decline in inflation experienced by consumers in April is a little less than
that of the official CPI measure. Households are spending much less on some of
the items whose prices are declining and vice versa.
While many of these changes in spending patterns will reverse as businesses
reopen, we expect some to persist. These consumption patterns will continue to
affect the measurement of underlying price pressures through the recovery
period until they stabilize and the weights are eventually adjusted.
- 9 -
At the Bank of Canada, we are mindful of the impact that these shifts in spending
are having on measured CPI inflation because our 2 percent inflation target for
monetary policy is defined in terms of the CPI. However, it is important to note
two points. First, to gauge current underlying inflationary pressure in the
economy we rely on our three preferred measures of core inflation, which limit
the effect of volatile components such as gasoline.
Second, when we conduct monetary policy, our focus is not primarily on CPI
inflation today but on the forecast for CPI inflation in the future. Any policy action
we take now typically takes six to eight quarters to work its way through the
economy.
For this reason, while we are trying to understand how the pandemic is affecting
the composition of household spending and the prices of items such as gasoline
and groceries today, we are most interested in whether these impacts will
continue into the future. The persistence of these effects will largely depend on
our ability to control the virus and the consequent effects on household
confidence and spending.
The housing market stalls
The economic shock of the pandemic has also had a pronounced effect on
expenditures on housing and the housing market itself. Housing market activity
had picked up in the year before the outbreak after slowing in 2018 in response
to higher interest rates, macroprudential stress-test measures designed to keep
financial vulnerabilities in check and regional changes to housing regulations.
As with consumption, both supply and demand forces drove the drop in spending
on housing. On the supply side, activities related to buying and selling a house
became much more difficult to do because of the physical distancing measures.
On the demand side, a decline in employment, income and wealth, as well as
increased uncertainty about the future, hurt confidence.14 These factors led to a
near closure of resale housing markets, with sales and listings both down sharply
throughout Canada (Chart 8). However, declines were more concentrated in
provinces that were quick to impose the most-stringent containment measures-
Quebec, Ontario and British Columbia.
Chart 8: Existing home sales tumble below underlying demand
Seasonally adjusted annual rate, thousands of units
900 590
540
800
490
700
440
600 390
340
500
290
400
240
300 190
Jan-2018 May-2018 Sep-2018 Jan-2019 May-2019 Sep-2019 Jan-2020 May-2020
New listings (monthly, left axis)
Resales (monthly, right axis)
Estimate of underlying demand for resales (quarterly, right axis)
Note: Underlying demand is estimated using the methodology described in M. Khan and T. Webley, "Disentangling the
Factors Driving Housing Resales," Bank of Canada Staff Analytical Note No. 2019-12 (April 2019).
Last observation: May 2020
Sources: Canadian Real Estate Association and Bank of Canada calculations
With sales and listings initially falling in tandem, the ratio of national sales to new
listings-an important indicator of market conditions-remained near
prepandemic levels (Chart 9). But this ratio fell back in May to within balanced
market conditions as listings rebounded more strongly than sales.
Consequently, measures of national average house prices that control for
compositional changes have remained relatively stable (Chart 10). Still, there are
notable regional differences beneath the national numbers. Ratios of sales to
new listings in expensive markets such as Ontario and British Columbia have
cooled, and prices for higher-end homes have declined.15 However, the dynamic
since February has generally resulted in slight reductions in the ratio of sales to
new listings, with some exceptions (the ratio in Newfoundland and Labrador,
British Columbia and Quebec has declined more than in other regions). If these
conditions hold, we could see softer price growth in most markets in the months
ahead.
Chart 9: Ratios of sales to new listings
Chart 10: Home price indices that adjust for
have declined more in some
composition have held relatively
regions than others
stable over the containment period
Ratio %
Year-over-year growth not
Seasonally adjusted, monthly data
18
seasonally adjusted, monthly data
110
15
100
12
90
9
80
6
70 3
0
60
-3
50
-6
40
-9
30
-12
20
-15
2018 2019 2020
Teranet-National Bank National
10 year range
Composite House Price Index
Current ratio (May 2020)
Aggregate Composite MLS Home Price
Index
Pre-pandemic ratio (February 2020)
MLS Average Resale Price
Sources: Canadian Real Estate Association Last observation: May 2020
Sources: Teranet-National Bank and
Last observation: May 2020
and Bank of Canada calculations
Canadian Real Estate Association
The market for existing homes wasn't the only casualty of the containment measures
as new home construction was severely curtailed across the country (Chart 11). For
example, Quebec stopped all housing construction, while other provinces allowed
projects already underway to continue. As a result, April housing starts declined
21 percent from their February level to an annualized 166,000 units nationally. As with
resales, the largest declines were observed in the provinces with the severest
restrictions: Quebec starts plunged to zero in April, and British Columbia and Atlantic
Canada saw steep declines. In contrast, housing starts in the Prairies rose from
February levels, as did housing starts in Ontario. But the resumption of new home
construction in Quebec helped boost national housing starts to 193,000 units in May,
leaving the level just 8.2 percent below that in February.
Chart 11: Indicators of monthly new construction declined in April as containment measures
took effect, but have since partially rebounded
Seasonally adjusted annual rate, monthly data
Thousands of units
270
250
230
210
190
170
150
Jan-2018 May-2018 Sep-2018 Jan-2019 May-2019 Sep-2019 Jan-2020 May-2020
Housing starts Building permits
Sources: Canada Mortgage and Housing Corporation and Statistics Canada Last observation: May 2020
While housing market resales and new residential construction activity almost
came to a halt in some provinces during the containment period, recent data
indicate a partial bounce back due to the easing of containment measures,
improved confidence and lower mortgage rates. Nonetheless, we expect some
volatility and regional differentiation to persist given heightened uncertainty about
the pandemic and its impact on economic prospects, including oil and other
commodity prices.
A crucial role for credit
I'd like to now turn to the impact of COVID-19 on household borrowing and
especially debt. In recent years, the Bank has highlighted in our Financial System
Review that elevated household debt, primarily its distribution rather than its
overall level, is a significant financial vulnerability because many households are
highly indebted.
We noted in our May FSR that these households may face severe difficulties
servicing their debt if they suffer a persistent and material decline in income.
About 20 percent of all mortgage borrowers do not have enough liquid assets to
cover two months of mortgage payments.
Since the COVID-19 crisis began, household credit growth has eased for two
main reasons. First, as I mentioned earlier, various policy measures are helping
indebted households cope with income losses and lowered the cost of servicing
some existing debt. In addition, Canadian banks have allowed more than
700,000 households to delay mortgage payments for up to six months. Banks
have also provided payment deferrals and interest rate relief on other products
such as credit cards, auto loans and lines of credit (Chart 12). Together, these
measures are helping to bridge income losses and are limiting the need for
already-indebted households to turn to additional borrowing.16
Chart 12:Banks have approved payment deferrals on a range of credit products
Number of approved payment deferrals
Number
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
HELOCs* Personal lines of Personal loans Auto loans Credit cards Mortgages
credit
Note: Deferrals include data from the six largest Canadian banks as well as from select smaller banks. Numbers are subject to revision as reporting methodologies continue to evolve.
Source: Financial Consumer Agency of Canada
* home equity lines of credit
Second, shifts in household spending have also played an important role in
limiting the need for additional borrowing. As discretionary spending has
declined, so has the demand for credit typically used to make such purchases.
This is especially true for big-ticket purchases such as cars. In April, consumer
credit, which includes auto loans, declined by about 15 percent on a three-month
annualized basis, marking one of its biggest drops on record (Chart 13).17
16
Payment deferrals will themselves add modestly to debt as interest on deferred principal payments
accrues. This increased debt will have a small impact on future monthly payments and any increase in
monthly payments could be neutralized by extending the amortization period. However, households that
defer will likely be living with their existing debt for longer, resulting in an increase in the overall amount of
interest paid over the life of the loan.
17
Real estate secured credit has continued to reflect the pre-pandemic strength in housing activity. This is
because a home purchase is reflected in credit data once the associated mortgage is funded, which typically
occurs two to three months after the sales agreement itself.
Chart 13: Household credit growth eased in April, reflecting an abrupt drop in consumer credit
3-month percentage change, at annual rates
%
10
86420-2
-4
-6
-8
-10
-12
-14
-16
Apr-17 Apr-18 Apr-19 Apr-20
Total household credit Consumer credit Real estate secured lending
Source: Regulatory filings of Canadian banks
Last observation: April 2020
Nevertheless, it is crucial that credit continues to flow to households, especially
to those that need it. That is why the availability of credit has been a central focus
of the Bank's policies, especially at the outset of the crisis when financial markets
and institutions were under stress as market liquidity dried up and bank funding
costs rose. In March, we reduced our policy interest rate by 150 basis points to
help ease these costs. These cuts have been passed through to most consumer
interest rates, albeit to varying degrees, reflecting in part the effect of global
factors, namely higher risk premiums.18 We knew these rate cuts would not add
much stimulus during the containment period since households were unlikely to
borrow to boost consumption given elevated uncertainty and the supply
constraints. But access to low-cost credit served as a bridge during the
containment period and will be critical to support household demand once the
recovery begins.
Going forward, some vulnerable households are likely to fall behind on their loan
payments if incomes do not recover by the time payment deferrals end.19 Indeed,
the longer income losses persist, the greater the likelihood that cash flow
difficulties translate into a rise in insolvencies. The situation in energy-producing
provinces is of particular concern, as households had already been under
financial stress as a result of the 2015-16 decline in oil prices (Chart 14).
Chart 14:Households in energy-intensive regions were experiencing financial stress
before the pandemic
Consumer insolvencies as a share of working-age population
%
Moving 12-month sums expressed in deviations from historical averages
0.3
0.2
0.1
0.0
-0.1
-0.2
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Alberta Saskatchewan Newfoundland and Labrador Rest of Canada
Source: Innovation, Science and Economic Development Last observation: March 2020
I should note that consumer insolvency filings have dropped sharply during the
containment period. This reflects not only the income support measures I just
discussed but also the fact that insolvency is ultimately a legal process that
requires courtrooms to operate. Needless to say, we will be watching these data
very closely in the months ahead.20
Let me conclude my discussion of household borrowing by touching on one of
the most-cited statistics-the ratio of household debt to disposable income.
Some observers have stressed that this ratio is likely to increase in the near
term, which poses a threat to financial stability. This increase should come as no
surprise, as the denominator-household income-has declined with sharp
decreases in employment and hours worked. The numerator-debt-is a stock
variable that cannot change significantly in the short term. Nonetheless, we do
not expect a sharp increase, in part, because of the government's income
replacement policies. Once we are through the containment period, we can
better gauge how permanent the change is and what it means for the financial
vulnerability associated with highly indebted households.
The road ahead for household spending
The recovery period has begun in all provinces as the containment measures are
relaxed and economic activity is picking up. As I outlined earlier, we expect the
recovery in economic activity and household spending to have two phases. The
first phase, the reopening, will be a relatively rapid and strong pickup as some of
the measures are lifted and households consume goods and services they could
not buy during the containment period. But the recovery will be only partial. The
second phase, the recuperation, is highly uncertain and thus will be more
prolonged and uneven. Consequently, it will take some time for employment,
household income and confidence to return close to the pre-pandemic path. I
would like to elaborate on these two phases.
Initial phase of the recovery: reopening and partial rebound (B-C)
In recent weeks, we have begun to see some signs that a recovery is underway
across sectors (Chart 15).21 In May, consumer confidence increased and motor
vehicle sales rebounded sharply, both from low levels recorded in April. Housing
resale activity is also picking up in major markets, and employment has started to
recover. These early indicators suggest that the trough in economic activity and
household spending occurred in April and that the more severe outcome
depicted in our April Monetary Policy Report has been avoided. Fiscal and
monetary policy actions have underpinned this nascent rebound in demand.
Along with spending on housing, spending on durable and semi-durable goods,
such as motor vehicles and clothing, is expected to lead the rebound in
household consumption in the near term. In particular, demand for
interest-ratesensitive durables such as motor vehicles could be relatively strong initially,
supported by low borrowing costs.22
Chart 15: The share of fully open businesses is on the rise
%
%
a. Goods
b. Services
60
90
80
50
71.1
47.4
70
40
60
52.6
31.4
50
30
40
20
30
20
10
10
0
0
Services
Retail
Goods Agriculture
Arts, recreation and information
Natural resources Construction
Social services
Manufacturing
Note: The Canadian Federation of Independent Business has conducted 13 weekly surveys. The dates on the x-axis of this chart correspond to the
survey dates for each of these surveys. Survey 13 (June 12-TBD) is ongoing, so the data for that week presented above are preliminary. The member
survey focuses on small businesses, with 96% employing less than 50 employees. For a more detailed description of the membership see
https://www.cfib-fcei.ca/en/about-us#our-members.
21
Retail stores that have an outdoor-facing entrance have been permitted to operate as long as they adhere
to physical distancing guidelines, and malls have recently reopened in much of Central Canada. Most
construction and manufacturing operations have also been permitted to resume. In contrast, tourism-related
activities remain severely constrained, and most service sector businesses continue to operate strictly
through telework.
22
T. Chernis and C. Luu, "Disaggregating Household Sensitivity to Monetary Policy by Expenditure
Category," Bank of Canada Staff Analytical Note No. 2018-32 (October 2018), find that automobiles, other
transportation and furniture have proven historically to be most sensitive to changes in monetary policy.
There could also be pent-up demand for services that are less time-critical, such as
personal care and out-patient health services, and these should quickly bounce
back to pre-containment levels. Interac data that show an upturn in barber and hair
salon payments late in May corroborate this expectation (Chart 16).
Chart 16: Interac transaction data indicate that activities idled by the containment have resumed
Daily data, index: January 7, 2020 = 100
Index