Study underlines the impact of Covid on businesses

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The Rural Ontario Institute has issued a report examining the impact of the pandemic on non-metro Ontario up to October of last year. Non-metro means businesses based in smaller and rural municipalities and towns in the province, or “the population outside the commuting zones of a Census Metropolitan Area”. The report is based on data compiled by Statistics Canada, and found that in non-metro Ontario, the number of active businesses in October, 2020 was 7% lower than in January. This represents a recovery from 15% fewer businesses in May, 2020. There were a large number of business closures in April and May, 2020 and although many businesses were opening (or re-opening) in June and July, the number of active businesses in October, 2020 has remained at 7% below ‘normal.’

It should be noted that these figures do not take into account the impact of the latest lockdown and the loss of trade and revenues experienced by businesses over the Christmas and New Year season.

On a provincial level, the sectors with the largest decline in active businesses from January to October, 2020 were:

-15% : arts, entertainment and recreation.
-12% : accommodation and food services.
– 9% : administrative & support, waste management & remediation services.
– 9% : other (personal) services. These sectors had a slow but steady increase in the number of businesses during 2017, 2018 and 2019.

The businesses in these categories are the most obvious victims of lockdowns.

Entertainment, recreation, food services, and accommodation (hotels, etc,) have been significantly affected by having to close, or restrict operations.

– 9% : transportation and warehousing. This sector had a somewhat faster increase in the number of businesses during 2017, 2018 and 2019. The increase, however, was halted and reversed when people stopped travelling to work, on holidays, or in moving homes.

– 9% : real estate and rental and leasing. This sector had a small decrease in the number of businesses in the second half of 2019. This sector is experiencing a strange effect, in that homes are increasing in price, demand remains high, but some obstacles are preventing many deals from being finalised. People cannot move to their new home, and so cannot finalise the sale of their old one. The effects along the chain of buying and selling affects everyone involved. Builders are facing increases in the cost of materials as movement is restricted, but have committed themselves to agreements based on lower costs.

Overall, the ROI report is only an interim update on the effects of the pandemic on non-metro business. Once the impact of the post-December lockdown is factored in, the picture is bound to be even bleaker. Statistics Canada reported last Friday that Ontario lost almost 153,000 part-time jobs last month, notably in non-essential retail ordered closed by the Ford government.

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