Signs of recovery increase
The economic hit from COVID-19, together with the lockdowns, are weighing heavily on our consumer price index, which as of mid-June was only a few points below the Bank of Canada’s target of two per cent.
Canadian retail sales dropped 9.9 per cent in March and then dropped again to a staggering 26.4 per cent in April. This was a much deeper low than originally anticipated by Statistics Canada’s estimate of 15.6 per cent.
Many businesses have suffered immensely from the pandemic shutdowns, with some having to rethink their future plans or find new ways to retain and grow their customer base. It is important to note, that even with all this “doom and gloom” over the past few months, StatsCan recently estimated an increase in May sales of 19.1 per cent. Yes, our economy has been hit harder than we initially estimated, but recovery is swiftly on the horizon. Canadian existing home sales recently increased to 56.9 per cent and new listings rose by 69 per cent in May. It is important to share some surprising outcomes of the pandemic that are not often mentioned in the media but seen at the banking level due to retail and commercial borrowing rates being at an “all-time low.” We have seen increases to school loan applications and can confirm reports of substantial increases to online school admissions. Another point to mention is that vehicle financing loans are on the rise, with many car dealers reporting higher sales than ever before. Rather than the original plans by most car manufacturers to shut down plants, many car companies are operating at full capacity and increasing vehicle production. We are beginning to see this activity now impact the multitude of manufacturing firms that also service this industry.
Another growing trend is increased loans for home renovation. Many Canadian home-improvement, big-box stores are just now reporting record sales in May and June as more and more people start outfitting their homes with home offices. The trend to “reduce the commute and work from home” has spawned a whole new flurry of consumer spending. Painters, contractors, home decor and furniture stores all seem to be experiencing an increase in sales.
Many people believe we are still headed for a recession — but honestly, I don’t see it. Yes, there will always be fallout when markets change and consumer ideals expand in a different direction, but, realistically, we anticipate a period of growth and improvement over the coming years. Remember that ideas can change, but good business will not die, it just goes in a different direction. This new normal will be a good thing — just wait and see!