Sector Impacts of Coronavirus (COVID-19)

While individual industries feel the impacts of coronavirus and the subsequent economic impacts very differently, looking at the impact of industry sectors allows us to draw conclusions and see trends across various industries operating in a similar space in the overall economy.
Each economic sector of industries includes a summary developed by our research team and information pertaining to the industries within that sector.

The SBA compiles information on PPP loans and presents them in many different ways. View further breakdowns in the full report by clicking on the image above.

How US Sectors Are Affected

February 8, 2021

Some segments of the management and administrative services sector are benefitting and others are hurting significantly by the fallout from coronavirus. All states have taken steps toward reopening. However, daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. Vaccine distribution in the US began in December, but the emergence of new, more communicable coronavirus variants has since led to increased travel restrictions in many parts of the world, including the US, the UK, and the European Union.

While travel should rebound as more people receive vaccinations, travel-related industries face a lengthy recovery. Worldwide passenger traffic demand, as measured by revenue passenger kilometers (RPKs), fell nearly 65% in 2020 compared to 2019, according to the International Air Transport Association (IATA). The IATA forecasts passenger traffic will rise about 50% in 2021 over 2020 levels, which would still be only half of 2019 levels. If travel and lockdowns get more severe due to new coronavirus variants, the IATA estimates 2021 growth could be as low as 13%, which would further prolong the recovery period for travel agencies, tour operators, and convention and trade show organizers. These firms have witnessed a rapid and severe decline in travel and gatherings, as businesses and consumers attempt to avoid close contact and closed-in spaces like convention centers and airplanes. Businesses and organizations have cancelled or postponed events and consumers have cancelled vacations. International travel largely ceased, due in part to fears of challenges trying to re-enter the US.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. Administrative Services was ranked at 13, but risk varies among the 12 major occupations in the sector.

There were glimmers of air travel recovery during the summer but as 2020 neared its close new variants of the virus, worldwide spikes in new cases, and tighter travel restrictions put even more downward pressure on demand. The UK went into lockdown and will not emerge before February 22. In late January the US began requiring all travelers entering the country to show a negative test or prove they have recovered from COVID-19 in the last 90 days. Around the same time, the EU imposed similar requirements. There could be an extended period of time after the coronavirus subsides before businesses and consumers are comfortable enough to resume travel.  According to the Deloitte rankings, administrative and support roles – which include travel arrangement and reservation services – have medium scores for physical proximity to others as well as for face-to-face discussions.

Travel-related firms are losing commissions as new travel bookings dry up. Global passenger traffic fell nearly 70% in December 2020 compared to the same month a year earlier, according to the IATA. January bookings for new travel were off 70% year-over-year. The TSA screened 493,338 airline passengers on February 2, 2021 compared to over 1,677,798 the same day a year earlier.

Temp services are trying to place workers as demand in some industries has risen while employment in other industries has plummeted. For the week ending January 29, job postings on Indeed increased for positions involving loading and stocking (+30.2%), construction (+24.1%), pharmacy (+23.1%), and driving (+17.7%). Job postings remained weak for hospitality and tourism, beauty and wellness, arts and entertainment, and food preparation and service. Temp services have medium risk for face-to-face discussions and proximity to others, according to Deloitte.

Segments in high demand include facility support services and janitorial firms which are at the front lines of cleaning and sanitizing buildings to prevent the spread of coronavirus. Cleaning services providers saw strong year-over-year growth in December 2020, according to the Home Service Economic Report: 2020 Review released in January 2021 by Jobber, a job tracking and customer management software firm. Median revenue for cleaning firms in December was 13% higher than year-ago levels. New cleaning work scheduled was up 2% during the same period, but fell from 7% growth seen in November. The commercial segment of the market fared better in 2020 than residential, as consumers cleaned their own homes more often.

With most US states reopened, businesses that serve the public may hire additional security personnel to help ensure social distancing practices are observed. Key areas of demand include retail, branch banking, and healthcare. Security guard firms are also consulting with managers of offices and other facilities about distancing, enforcing the wearing of masks, temperature checks, and other safety measures as more people return to work. Protective services – which includes security guard firms – are high-risk due to the frequency of face-to-face discussions, according to Deloitte. Security guards and guard firms in some states have voiced concern that they have not been given clear guidance about when guards can expect to be vaccinated, despite being in high-risk environments, including hospitals, pharmacies, and COVID-19 testing sites. The Centers of Disease Control and Prevention (CDC) has issued phased guidelines for vaccine distribution prioritization. However, individual states are not required to follow CDC guidance and have developed their own plans, which vary from state to state.

Segments less affected by the pandemic include landscaping services, and pest control services. Providers of lawn care and landscaping – “Green” – services performed well in 2020 according to Jobber.  Revenue growth in the Green industry returned to pre-COVID-19 levels in June then gained steam in Q3 and hit record highs in Q4. Median revenue for Green companies was up 32% in December compared to the same month in 2019. New work scheduled increased 27% during the same period. One-off jobs saw stronger growth for most of the year compared to contract work, but by December contract work was up 28% year-over-year and one-off jobs rose 26%

Some pest control services are supplementing their income by providing cleaning and disinfecting services. The CDC’s Advisory Committee on Immunization Practices (ACIP) has recommended pest management professionals be among the groups to receive COVID-19 vaccinations during Phase 1b of the vaccine rollout schedule, according to the National Pest Management Association (NPMA). Phase 1b is the second group in the phased rollout following Phase 1a, the top priority group which includes healthcare workers and residents of long-term care facilities.

Services like pest control, landscaping, and janitorial services have medium scores for physical proximity to others as well as for face-to-face discussions, according to the Deloitte rankings.

During the lockdown, waste management services saw a shift in garbage volume from commercial to residential as people worked from home, sheltered in place and avoided public places like restaurants. As more businesses reopen, levels of residential and commercial waste may begin to shift back toward the pre-pandemic balance. Industry insiders suggest waste management companies may be pressured to reduce fees as municipal contracts are renegotiated and renewed. Local governments are expected to look for ways to trim budgets amid falling tax revenue. In January, the Solid Waste Association of North America issued a press release urging Congress to pass additional pandemic stimulus proposed by the Biden administration that would include emergency aid to state and local governments. Waste management and remediation services revenue rose 9.6% in the third quarter of 2020 compared to the second quarter, according to the US Census Bureau. Revenue was down 3.6% on a year-over-year basis.

According to the Deloitte study, industries involved in transportation and material moving – which includes waste management – are at medium risk for physical proximity and face-to-face contact.

Segments that will see increased demand as the epidemic subsides are collections agencies and repossession services.  Businesses and individuals who lost income due to shutdowns during the height of the epidemic may struggle to make payments on utilities, loans, credit and medical bills. The CARES Act and the stimulus package passed in December 2020 provide some safeguards for consumers in terms of payment forbearance. Businesses are also offering temporary forgiveness for late payments. Collections firms are considered part of the business services industry and therefore have medium scores for face-to-face contact and physical proximity to others, according to Deloitte.

February 8, 2021

Coronavirus impacts the agriculture sector largely in demand for food, food exports, biofuels, and farm labor. At the onset of the pandemic and the ensuing lockdown, the industry was challenged by school and restaurant closures and limitations on food service (drive-up or delivery).  All states have taken steps toward reopening – including restaurant dining rooms. However, daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. The rise in new cases prompted some state and local governments to suspend or restrict indoor dining. When indoor dining is permitted it is usually at a fraction of normal capacity to accommodate social distancing, which limits food purchasing volume. It also remains to be seen when customers will be ready to visit restaurants in pre-pandemic numbers.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The agriculture, forestry, fishing, and hunting sector ranked 20th – the lowest risk sector – because 70% of workers have low levels of face-to-face-contact.

The industry benefited from runs on grocery store shelves as consumers stockpiled food during the quarantine. Changes in the patterns of grocery buying – fewer shopping visits with larger cartloads – combined with greatly reduced sales to restaurants and schools pressured the supply chain. Changes in food packaging and distribution from commercial and institutional to household consumer created bottlenecks. Outbreaks of COVID-19 caused several large meat processing plants to shut down, and major meat producers warned of coming shortages. In these cases, livestock were diverted to other plants for processing. Temporary closures at meat packing plants led some livestock producers to cull herds. Critics of industrialized factory farming have called for a flatter farming system with fewer chokepoints where ownership and geographic footprint are more diverse.

A number of pandemic-related factors are expected to curb global meat consumption, including restaurant closures, reduced consumer buying power, and general wariness following COVID-19 outbreaks at meat processing plants. Worldwide per-capita meat consumption is estimated to have dropped nearly 2% in 2020, according to the UN.

US per-capita meat consumption is expected to fall in 2020 for the first time since 2014 and may keep dropping until 2025, according to the University of Missouri’s Food & Agriculture Policy Research Institute (FAPRI). China’s meat imports are expected to fall in 2021 amid a rebound in its swine herd and COVID-19-related supply chain bottlenecks, according to Bloomberg. In June 2020, China began treating cold food imports for coronavirus, which has logjammed shipments. China began relying on more pork imports after a series of African swine fever outbreaks beginning in 2017 led to a significant culling of animals. China’s swine herd has begun to rebound. Increasing domestic production and slow import processing could reduce China’s 2021 meat imports by between 20% and 30%, according to Rabobank. China is by far the world’s largest national consumer of pork. Industry experts suggest a global pullback on meat eating has the potential to cause a glut and turn meat prices sharply downward, hurting US ranchers and farmers.

The US and China signed a trade agreement in January 2020. Starting March 2, under Phase One of the agreement, Chinese importers of US agricultural products could apply for exemptions to the nation’s tariffs on US goods, which makes US products more affordable. China’s imports of US agricultural products under Phase One were hindered by China’s lockdown early in 2020. However, once China contained the spread of the coronavirus, imports of US products increased. Exports to other countries are also being impacted by the virus. For the week ending January 21, export volume declined 2.9% compared to the prior week for pork, 1% for beef, and 74% for soybeans. Export demand for corn increased 29%, wheat was up 15%, and rice exports rose 2%.

When the global market is flooded with cheap oil, biofuel becomes a more expensive source of energy and demand declines. On the other hand, lower prices for gas and diesel fuel benefit crop producers by reducing machinery operation costs. US fuel ethanol production declined 12% in 2020 compared to 2019, according to the Energy Information Administration. Fuel ethanol production is projected to rise 9% in 2021 over the prior year.

The agriculture sector has struggled with shortages of farm labor for years, but quarantines and closed borders may exacerbate the problem. Farmworkers have also been disproportionally affected by coronavirus. Many are undocumented and about 10% are in the US on H-2A visas which allow foreign workers – mostly from Mexico – to do seasonal work in the US. Infection rates in many US agricultural counties have been high as workers live in cramped quarters and some lack PPE. Another risk is the impact of the virus on senior farmers. The average age of farmers in the US is over 65 years, which puts many at higher risk of suffering severe effects if the virus is contracted. The fact that agricultural operations are largely rural does somewhat insulate farmers from contracting the virus.

Farmers and ranchers that sell directly to consumers are seeing increased demand. Food delivery businesses run by farmers are benefiting from consumer concern over possible exposure to coronavirus while shopping in grocery stores and wholesale clubs. With most restaurants operating at reduced capacity, more consumers are cooking at home, so these fresh agricultural product deliveries tend to be larger and more frequent.

US net cash farm income is projected to rise by $24.7 billion (22.6%) to $134.1 billion in 2020 compared to 2019, according to a December 2020 USDA forecast. Net cash farm income includes cash receipts from farming as well as farm-related income, such as US government payments. Cash receipts for animals and animal products are expected to decline $9.7 billion (5.5%), while crop receipts are projected to increase $6.5 billion (3.3%). Higher demand for nuts, fruits, and soybeans should more than offset weaker receipts for corn and cotton. Direct government payments are forecast to be up more than 107% in 2020 compared to the prior year. Farm supports, which will total $46.5 billion for 2020, increased due to supplemental and ad hock COVID-19 relief payments.

As exports have been volatile, farmers have relied on various US government stimulus programs – including provisions of the CARES Act and direct aid by the USDA. Payments under the Coronavirus Food Assistance Program (CFAP) totaled more than $23.5 billion for 2020, according to the USDA. The Paycheck Protection Program (PPP) provided nearly $6 billion, according to FAPRI. Farmers also received assistance from Market Facilitation Program (MFP) payments. FAPRI estimates if programs such as CFAP, PPP, and MFP are not continued in 2021, net farm incomes could decline by $16 billion and net cash incomes would drop by almost as much. In late 2020, former President Trump signed a $900 billion stimulus bill that includes $13 billion in agricultural aid. The bill also revived PPP and includes $284 billion in funding for Small Business Administration (SBA) loans. The most recent round of PPP lets eligible borrowers get a second draw loan. It also simplifies loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible.

February 8, 2021

The construction sector has been less affected in the short-term as existing projects progress, potentially at a slower pace due to difficulties in some areas to secure materials. The sector is expected to see a slowdown in new projects as businesses assess the coronavirus impact on their revenue and their ability to invest in capital projects.

All states have taken steps toward reopening. However, daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. The shutdown caused a large drop in construction job losses – more than 800,000 construction jobs were shed in April. By December, the construction sector had more jobs than it did in February, and employment was down less than 2% compared to December 2019. Job gains in December were strongest for nonresidential specialty trade contractors. For the week ending January 29, construction job postings on Indeed were up 24.1% compared to the same week a year earlier.

The Federal Reserve has lowered interest rates in efforts to spur investment in construction, real estate and equipment. Construction firms are reviewing their contracts with customers regarding responsibility for cost overruns and project delays. They are also reviewing their insurance policies regarding business interruption coverage.

Many construction materials are produced in China and other countries. Imports slowed due to production cuts and port delays. Some construction firms turned to domestic suppliers for materials to complete projects, but US-made construction materials can be more expensive than imports, which raises costs and tightens profit margins. Other firms are postponing completion, which adds to holding costs and can delay final project payments. Shortages of construction materials could result in price increases that further erode builders’ profits.

Demand for some types of construction, such as retail, hospitality, and entertainment venues, may drop as hard-hit industries take time to recover from lost revenue. Retailers and other businesses that fail or reduce their number of locations will leave a glut of commercial space unoccupied. This could negatively affect demand for new commercial space but will raise demand for commercial renovations as new or expanding businesses enter those spaces. However, some experts believe the trend of teleworking that began during the quarantine will remain and have long-term, negative effects on demand for office and commercial real estate in central-city locations. In a recent survey by Gartner, real estate leads all categories for CFO planned average budget cuts in 2021 at 3.4%.

The construction industry doesn’t have the luxury of allowing most employees to work from home. So, firms have stressed the importance of hygiene, social distancing, and staying home if sick to keep their employees and subcontractors on the job.  Firms are also cross-training employees, when possible, to take over functions for sick coworkers.

In a survey of contractors released in January by the Associated General Contractors of America (AGC), 78% reported project delays or disruptions because of the coronavirus. Only 35% said they expected their firm’s headcount to increase in 2021. Nearly two-thirds of contractors said projects are taking longer than they anticipated, and more than half reported costs have been higher than they estimated. Among specific construction segments, contractors are most pessimistic about retail, lodging, and private office construction.

Construction firms are eligible to apply for low-interest Economic Injury Disaster Loans (EIDL).  In late 2020, former President Trump signed a $900 billion stimulus bill that includes $284 billion in fresh funding for the Paycheck Protection Program (PPP) to provide Small Business Administration (SBA) loans. The most recent round of PPP lets eligible borrowers get a second draw loan. It also simplifies loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible.

Builder confidence began to moderate in December after a seven-month run of increases. Builder confidence hit a historic low in April as the epidemic took hold in the US, but then gradually built steam amid strong demand for new single-family homes and low mortgage interest rates. The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) was 30 in April, an all-time low. It then rose every month, hitting new all-time highs in September (83), October (85), and November (90). Any reading above 50 is an indicator of a positive market. However, the HMI dropped to 86 in December amid concerns of rising construction costs. The HMI fell to 83 in January as construction costs, concerns about housing affordability, and a lack on lots and inventory continued to weigh on the market. Despite the dips in builder confidence in December and January, the NAHB noted the builder sentiment remains strong.

Construction spending in 2020 was up 4.7% from 2019. Residential spending increased 11.8% and nonresidential was fell 0.1%. The weakest segments for nonresidential spending were lodging (-13.9%), religious (-10.9%), and manufacturing (-10.3%). Spending growth was strongest for projects related public safety (+42.4), water supply (+16.6), and power (+4.6%).

The construction sector’s comeback since the onset of the pandemic has been fueled mostly by a strong residential market while the nonresidential building and infrastructure segments have been weak, according to the AGC. The pandemic has reduced demand for office and retail construction and budget cuts by state and local governments are expected to reduce construction spending for infrastructure projects. Nonresidential construction markets are likely to remain weak absent additional federal stimulus measures, according to the AGC. The stimulus package passed in late 2020 did not include aid for state and local governments. However, the Biden administration has outlined a plan for $1.9 trillion in additional stimulus, including $350 billion in aid for state and local governments.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The construction sector ranked 9th as workers have medium scores for contact with others, and medium-to-low scores for physical proximity to others.

February 8, 2021

While lenders are at risk of clients missing payments and defaulting on loans, they have opportunities to extend credit to borrowers and ease temporary cash flow worries resulting from the coronavirus pandemic. In the first half of 2020, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Wells Fargo set aside a combined $35 billion to brace for the potential of consumer and business loan losses. In the fourth quarter of 2020, five of the banks (Citigroup, JPMorgan Chase, Morgan Stanley, Bank of America, and Wells Fargo) cut their cash reserves set aside for loan losses by a combined $6 billion. The companies trimmed reserves amid stronger commercial and household balance sheets, and economic optimism stemming from vaccine and stimulus developments. The five biggest banks – Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley – reported higher fourth-quarter revenue from equities trading driven by the flood of new retail trading.

A robust housing market has boosted mortgage lending demand, but credit card and auto lending have been slow. Forbearances have so far staved off widespread defaults and losses. A fresh round of stimulus relief was passed in December. The $900 billion COVID-19 Economic Stimulus Relief Act included $600 stimulus checks per person, including children. The package also extends unemployment benefits of up to $300 per week, and the extension will run at least until March 14. The bill also reauthorized the Paycheck Protection Program (PPP). The PPP extension includes $284 billion in funding for Small Business Administration (SBA) loans. The most recent round of PPP lets eligible borrowers get a second draw loan. It also simplifies loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible. However, some economy watchers feel that even more aid is necessary to stave off consumer and business defaults. The Biden administration has called for further stimulus spending. Negotiations over the cost and structure of any further stimulus are ongoing.

Insurers have seen an influx of business customers attempting to make business interruption claims because the coronavirus outbreak and quarantines affected their ability to conduct business. Securities brokers, investment advisors and portfolio managers are all riding the stock market waves and dealing with clients’ concerns over volatility, lost wealth and buyers taking the chance on undercut stocks. Decreased business and consumer spending on travel, dining out, and entertainment is hurting credit card companies’ revenues. Due to economic uncertainty, Visa and Mastercard have stopped providing outlooks for financial performance. Except for a slight dip in September, finance and insurance sector employment has seen steady monthly gains since the lows of April. Between April and December, the sector has added about 110,500 jobs, and employment was up slightly compared to March.

During the quarantine and business shutdowns, income for many businesses and households declined, while expenses remained or even increased. Operating margins for businesses have tightened and cash reserves are drawing down. Household budgets have tightened, especially for hourly and commission-based workers that have experienced cuts in their workweek and sales opportunities. Creditors will experience late payments from clients, defaults on loans, and elevated bankruptcies filings that could extend well beyond the end of the coronavirus outbreak. Lenders could face repossessions of vehicles and equipment, and foreclosures on properties.

Customers that miss payments or default will suffer damaged credit ratings if lenders and the credit bureaus don’t make allowances. The Consumer Financial Protection Bureau recommends that lenders not report consumers as delinquent if they seek mortgage relief. Some lenders are reporting late payments to the credit bureaus which the bureaus are using to calculate consumers’ credit ratings. The CARES Act requires some companies that provide federally backed mortgages and student loans to offer payment deferrals. Other lenders have also offered consumers deferrals. In some cases, deferred payments have been erroneously reported as late to credit bureaus, which has hurt consumers’ credit ratings and loan affordability, according to Consumer Reports. Complaints to the Consumer Financial Protection Bureau about credit report errors have hit new heights during the pandemic, according to the US Public Interest Research Group, a consumer advocacy organization.

Consumer debt levels rose in November, according to the Federal Reserve. Revolving debt, which is mostly credit card debt, fell 1%. Nonrevolving debt such as mortgages and auto lending were up 6.1%. November marked the second monthly drop in revolving consumer debt. Americans paid down their credit card debt by $10 billion in the third quarter, according to the Wall Street Journal.

To assist customers in the short-term, lenders and credit card issuers are waiving late fees, return check fees, and interest charges, allowing skipped payments, reducing interest rates, and extending credit limits. Financial firms are working with customers one-on-one to determine the appropriate relief for their account. Lenders may also extend lines of credit to fundamentally stable customers. The Federal Reserve cut interest rates in March, which spurred a rush on mortgage refinancing and demand for title insurers.

If the Biden administration’s efforts to pass another round of stimulus are successful, the resulting direct payments to consumers and further extensions of federal unemployment benefits could reduce demand for short-term payday loans.

To hedge against large payouts, travel insurers generally excluded coronavirus in policies sold after mid-January 2020, deeming it a foreseeable event. However, some travel insurers provided benefits related to medical emergencies and evacuations.

Medical insurers are seeing a mix of activity as some customers seek testing and treatment for coronavirus. Wellness exams and elective surgeries were cancelled or postponed during the quarantine. As individual states reopen, medical appointments and procedures resumed. However, daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. Life insurers could see an increase in policy cash-outs as the coronavirus takes a toll on the senior population and those with compromised immune systems.

The property and casualty (P/C) insurance industry is working with a coalition of industries on a new relief fund, the COVID-19 Business and Employee Continuity and Recovery Fund created for the Treasury under the CARES Act. The industry is trying to avoid states creating insurance regulations that would force insurers to pay business interruption losses resulting from the coronavirus epidemic even if their policies exclude communicable diseases.

As of late December, nearly 1,500 business interruption lawsuits have been filed against insurers, according to a tracker maintained by the University of Pennsylvania Carey Law School. Of cases where courts have ruled, most have been dismissed. The vast majority of business interruption lawsuits will be matters for state rather than federal courts, according to The National Law Review. It is expected to be a lengthy process before any state supreme court issues a binding procedural determination of that state’s view of coronavirus-related business interruption claims. It will take even longer for a majority view to materialize among all state supreme courts.

Life insurers are making changes to how they write policies during the pandemic. The inability to obtain medical exams led some life insurers to deny policies to people age 70 or older. Life insurers relied more heavily on data from electronic health records, prescription databases, medical billing claims, and motor vehicle reports when writing policies, since medical exams were not feasible. Short term policies are available but insurers are cutting back on long term policies. Temporary coverage is also more difficult to obtain.

The banking industry is maintaining staff, while implementing hiring freezes and postponing expansion plans. For the week ending January 29, 2021, the seven-day average for new banking and finance job postings was down 1.3% compared to the same period in 2020, according to Indeed. Use of online banking is expected to increase as consumers avoid public spaces, like banks. Not all positions are frozen, some banks are hiring technology and information security personnel and others are hiring mortgage modification lenders. As retail banking and credit unions reopen, industry experts expect significant changes in policies that define social distancing protocols. In markets with heavy foot traffic that were hard-hit by the epidemic, facilities will likely be retrofitted or remodeled to ensure customers and workers can maintain safe distancing.

The CARES Act allows homeowners with federally backed mortgages, that can claim a hardship, to apply for a six-month forbearance. Concern regarding a potential mortgage industry crash could trigger another round of stiff lending regulation, aimed at nonbank mortgage lenders. As of mid-January, more than 2.7 million homeowners remained in active forbearance plans, according to mortgage technology and data firm Black Knight. More than 600,000 forbearance plans expire at the end of March 2021. Early in the pandemic about half of homeowners in forbearance continued to make monthly payments. By February only 12% of those in forbearance were making their payments, suggesting these borrowers might be under significant financial stress.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The finance and insurance sector ranked 11th as more than half of workers (including office, administration, and sales positions) have medium scores for face-to-face discussions and physical proximity. Other roles in the sector – including management, business and financial operations, and technical positions have lower levels of physical contact.

January 8, 2021

The healthcare sector has faced a myriad of challenges including increased demand for coronavirus tests and speed of lab processing, spikes in demand for beds and ventilation equipment, shifts in handling patient care, shortages of masks and other medical supplies, greater facility sanitation to prevent virus spread, inadequate staffing, and appointment cancellations.

Healthcare providers are experiencing greater numbers of patients asking for coronavirus tests and seeking treatment. Supplies of tests are ramping up as pharmaceutical manufacturers boost production but have been slow to reach the market. A spike in the number of severely affected patients, who require hospital beds and ventilators, overwhelmed some hospital systems. Hospitals, physicians’ offices, medical clinics and other healthcare providers will see an increase in patient volume and related revenue for coronavirus testing, but experienced a loss of revenue related to postponed wellness appointments and elective procedures which are more profitable than routine care.

The healthcare industry is continually issued updated guidance from the Centers for Disease Control (CDC), Food and Drug Administration (FDA) and Centers for Medicare & Medicaid Services (CMS). Healthcare companies are also developing and implementing internal policies for detection, reporting, care, and sanitization to prevent spread.

All states have taken steps toward reopening. As individual states reopen, medical appointments and procedures have resumed. Social distancing measures for office visits include spacing office furniture further apart, mandatory masks, and patients waiting in their cars instead of waiting rooms. Daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times.

The large increase in new cases has overwhelmed some hospitals, especially smaller ones in rural communities. Small hospitals typically transfer patients with complicated medical conditions to large hospitals in nearby urban areas but as new cases have risen, urban hospitals often don’t have room, according to the American Hospital Association. In other cases, large hospitals have been able to ramp up bed space quickly but are understaffed as medical personnel are increasingly sick with COVID-19, are in quarantine, or are on leave caring for an ill family member. A growing number of hospitals are reporting shortages of personal protective equipment (PPE) and testing supplies, according to The New York Times.

Hospitals also are tasked with separating coronavirus patients from others who are ill, injured, convalescing, or delivering babies. All of which could have compromised immune systems or higher susceptibility.

Health researchers think pooled testing can improve testing efficiency. With pooled testing, tests are done in small batches. If the pooled test comes back negative, everyone in the batch is negative. If the pooled test is positive, unused portions of the original samples are retested individually. Pool testing is thought to be of the most use in areas with low rates of infection where most pooled tests would come back negative, thereby getting quicker results while conserving resources.

Healthcare facilities require more resources to sanitize and control the spread of coronavirus. Workers in home healthcare settings are at greater risk of contracting and unknowingly spreading the virus. A shortage of nurses in the home healthcare setting also puts patients at risk due to less care, and can result in greater hospital admissions, further taxing the hospital system.

Healthcare providers with senior populations such as nursing homes, assisted living facilities, and continuing care and retirement communities (CCRC) are at high risk of elevated mortality rates due to high concentrations of patients with weakened immune systems and underlying conditions that can be exacerbated by respiratory illnesses like coronavirus. Many senior care facilities are limiting or denying visitors to protect residents. Home healthcare services have seen an increase in demand and revenue from convalescing patients that are transferred out of hospital settings to free up critical care beds.

Physicians, nurses, mental healthcare practitioners, home healthcare services, pharmacists, and other healthcare providers are using telehealth to connect with patients at home over video or phone to assess their conditions while limiting their exposure to the public. In some cases, medical equipment at the patient’s home can be accessed remotely to monitor their vitals.

The FDA gave the greenlight for healthcare providers to treat severe coronavirus cases with medicines already on the market that suppress the immune system and prevent it from attacking the respiratory system. Respiratory distress from the lungs filling with fluid and subsequent lack of oxygen to the blood system is the major cause of death in coronavirus patients. The healthcare industry is waiting for medications designed specifically to treat the virus but the development, testing and approval process is lengthy. Stopgap medications include remdesivir, dexamethasone, and monoclonal antibodies. In November, the World Health Organization (WHO) published a recommendation in UK medical trade journal BMJ that advised against the use of remdesivir for patients hospitalized for COVID-19. The WHO claimed the drug had no meaningful effect on reducing mortality or other clinical improvements. The FDA has found that remdesivir can help hospitalized patients.

Hope for ending the pandemic intensified in December as two vaccines began being distributed. Both of the vaccines (one developed jointly by Pfizer and Germany-based biotech firm BioNTech, and the other developed by Moderna) proved more than 90% effective in clinical trials, and require two doses to achieve full effectiveness. As of late January 2021, nearly 50 million doses of vaccine had been distributed and more than 29 million had been administered, according to the Centers for Disease Control and Prevention (CDC). The CDC has issued phased guidelines for prioritizing vaccine distribution but states are not required to follow them.  Phase 1a includes high-risk healthcare workers, people with health conditions that make them high risk if they contract COVID-19, and older adults who live in crowded settings. Phase 2 includes teachers, older adults, essential workers in high-risk settings, and people of all ages with health risks. Vaccination of the general public (Phase 3) could begin as soon as spring or summer 2021.

Three more vaccines have shown strong effectiveness in clinical trials and are awaiting FDA approval – one from Moderna, another by a partnership between AstraZeneca and Oxford University, and one from Johnson & Johnson. Optimism on the rollout of vaccines has been tempered by the emergence of mutated coronavirus variants than are more contagious than the original virus and may be more resistant to vaccines. Some health experts suggest vaccine administration is in a race against the spread of the new virus variants. To help get vaccines out faster, the Biden administration is launching a pilot program to ship vaccines directly to Walgreens and CVS pharmacies. At first the government will ship about 1 million doses per week to about 6,500 pharmacies. If the program is successful in scaling up vaccinations, it could be widened to about 40,000 pharmacies nationwide.

In late-December 2020, former President Trump signed a new $900 billion COVID-19 stimulus package. The bill includes $20 billion for vaccine purchases, $9 billion for vaccine distribution, and $22 billion to help states with COVID-19 testing, contact tracing, and other mitigation efforts. The legislation also contains a measure that will ban “surprise” medical billing. The new law, which would take effect at the beginning of 2022, aims to prevent consumers from receiving unexpected bills for care that’s outside their insurance network. The law requires fair payment rates to be negotiated between providers and insurers by an arbitrator who must take into account local, in-network rates. Some aspects of the new rule, including a Department of Health and Human Services determination of who the arbitrators will be, have yet to be finalized.

To ensure poorer countries have access to vaccines that prove effective, the World Health Organization (WHO) has set up the Covax initiative which pools money and vaccine development efforts to ensure poorer nations have access if an effective vaccine is developed. Nearly 80 wealthy countries have signed on to help fund Covax. Wealthy nations would have to pay full price for a vaccine, in part to help subsidize poorer ones that cannot afford to vaccinate their entire populations. The Trump administration did not sign the US on to the Covax project. However, the Biden administration has pledged to work closely with the global community – including the WHO and Covax – to ensure developing countries have access to vaccines. In February Covax said it would ship more than 335 million doses of the AstraZeneca vaccine to 145 countries in the first half of 2021.

The global healthcare sector is a major target of cybercrime and hacking. Experts expect attempts to increase during the pandemic as healthcare systems are stretched thin. Ransomware attackers have accessed patient medical records and not only gone after healthcare companies but the patients themselves, threatening to expose their private medical data.

Incidence of depression, anxiety, stress and anger related to social distancing and job losses are on the rise and are driving fears that affected people will commit suicide, homicide, domestic violence, turn to drugs or alcohol or commit crimes. The mental health and substance abuse segment of the healthcare industry is seeing increased demand for services and is offering telehealth options for counseling remotely. Government resources dedicated to fighting opioid addiction have been reallocated during the coronavirus epidemic.

The CARES Act allows hospitals to receive an advance on expected Medicare reimbursements and provides $100 million to reimburse eligible healthcare providers for expenses or lost revenue directly related to COVID-19. Despite the cash infusion, Moody’s maintains its downward revision of non-profit hospitals’ 2020 outlook from stable to negative. More than 20 US hospitals closed down in 2020, according to Becker’s Hospital Review. Higher costs from the COVID-19 pandemic combined with significant drops in surgeries and outpatient treatments have put a huge strain on hospital finances. In mid-July, the US Department of Health and Human Services began the release of $4 billion in assistance for troubled hospitals in their fight against COVID-19. Hospitals with tight margins and that serve a high percentage of vulnerable populations will receive $3 billion. Another $1 billion will go to help rural hospitals, urban hospitals with certain Medicare designations, and hospitals in small metropolitan areas.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The healthcare and social assistance sector ranked as the highest-risk industry group due to 61% of the workforce having high levels of physical contact with others and very high scores for exposure to disease or infections.

February 8, 2021

Coronavirus has affected the information sector in unique ways. Movie theaters in all but a handful of states have begun to reopen but were closed for months. This is cutting profit to the bone in an industry with already thin margins. Major theater chains AMC, Regal Cinemas, and Cinemark began opening some of their locations in August. However, there are not very many high-profile films to attract theatergoers. Some chains require customers to wear masks, others will only require masks if mandated by state or local regulations. To promote social distancing, theaters are operating at a fraction of their total capacity. In October, Cineworld – the parent company of Regal Cinemas – closed more than 660 of its theaters in the US and the UK. The company made the decision to close temporarily as studios continue to push back the release dates of blockbuster films and audiences have been slow to return.

The rollout of vaccine distribution in December 2020 has provided hope that by the second half of 2021 the movie industry might be able to return to some semblance of normalcy. Regal Cinemas hopes to reopen theatres in Los Angeles and New York in March. As of late January 2021, nearly 50 million doses of vaccine had been distributed and more than 29 million had been administered, according to the Centers for Disease Control and Prevention (CDC). The CDC has issued phased guidelines for prioritizing vaccine distribution but states are not required to follow them.  Phase 1a includes high-risk healthcare workers, people with health conditions that make them high risk if they contract COVID-19, and older adults who live in crowded settings. Phase 2 includes teachers, older adults, essential workers in high-risk settings, and people of all ages with health risks. Vaccination of the general public (Phase 3) could begin as soon as spring or summer 2021. Optimism on the rollout of vaccines has been tempered by the emergence of mutated coronavirus variants than are more contagious than the original virus and may be more resistant to vaccines. Some health experts suggest vaccine administration is in a race against the spread of the new virus variants.

Daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times.

TV and game shows that are continuing to film are doing so mostly without live studio audiences. Some production and broadcasting of live events, such as collegiate and professional sports, have resumed but with fewer if any fans in the stands. News and talk programs with more than one anchor are filming and broadcasting from separate locations to observe social distancing. Both are interviewing guests through video chat to eliminate the need for guests to travel to the studio. After the outbreak and concerns over public crowds have subsided, there could be a rush to see movies, concerts, sporting competitions, and other televised events, as quarantined consumers are eager to leave home, be entertained and socialize.

Persistent outbreak conditions in California have complicated the state’s efforts to resume entertainment production activities. The Los Angeles movie and TV industry had restarted productions then shut back down in early January as a wave of new cases threatened to overwhelm hospitals. Productions have since resumed. Through the Industry-Wide Labor Management Safety Committee Task Force, various unions that represent television and film production personnel have created a set of guidelines to keep sets as safe as possible. The strategies include daily temperature checks, extensive testing, masks and other PPE for all cast and crew not on camera, and cleaning protocols. The guidelines have been submitted for approval to public-health officials in several jurisdictions where movie and TV production operations are concentrated, including New York, California, Georgia, Canada, and New Zealand.

 

Most professional sports including NASCAR, professional golf, the National Hockey League, and the NFL, the NBA, WNBA, and Major League Baseball had games and events in 2020. Most returned without live spectators. Some NFL games allowed spectators.

Subscription programming services such as Hulu, Netflix, and Disney+ are gaining subscribers at the expense of cable and satellite pay TV services. By the fourth quarter of 2020, 37% of US households reported having already cut the cord, and another 37% reported they were considering doing so, according to market intelligence firm Civic Science. Just over 25% of Americans said they were not interested in cutting the cord. Consumers are cutting the cord on their pay TV services citing high prices compared to streaming alternatives. To stem their losses, pay TV providers have shifted focus to their more lucrative internet offerings.

In the earlier days of the pandemic, news organizations and magazine publishers, large and small, dropped their paywalls to allow non-subscribers to access coronavirus-related coverage. More recently, news publishers have begun reinstating their paywalls as they became savvier about designing offers that attract new subscribers and as advertising dollars became scarcer. Billions of ads on publishers’ sites have been blocked due to coronavirus blacklisting, resulting in diminished ad revenue.

With more people working from home, use of virtual private networks (VPN) to access company computer systems has risen significantly. Data centers are experiencing a surge in traffic as more people access data remotely. They are also encouraging customers to use the data center’s in-house technical staff to manage hands-on work with servers and systems, rather than risk infected clients entering the data center. Due to more people working remotely, incidence of phishing emails, ransomware and hacks have risen. Cloud-based services are scaling up defenses. Cloud services are forecast to see greater IT investment as the economy recovers and businesses explore more remote-friendly work platforms for their employees. Global end-user spending on public cloud services is expected to increase more than 18% in 2021, according to Gartner.

As states reopen their economies, libraries will open as well with local officials providing guidelines for proper distancing and other precautions.

Radio and TV stations are keeping listeners and viewers informed on coronavirus updates, closures, vaccine distribution, and local resources. Field crews are assessing situations and taking precautions when performing interviews and covering events outside the studio.  As more states paused or rolled back their reopening schedules amid rising COVID-19 cases, local TV and radio news kept viewers and listeners informed about spikes in new cases and rapidly changing regulations which involved new mask-wearing requirements in some jurisdictions.

The information sector shed 279,000 jobs in April, 85% of which were in the motion picture and sound recording industries, according to the Bureau of Labor Statistics. The sector lost another 39,000 jobs in May, with more than a quarter of the losses coming from the motion picture and sound recording industries. About 9,000 sector jobs returned in June. Sector job growth was negligible in July, but 15,000 jobs returned in August and 14,000 of them were in the motion picture and sound recording industries. The sector added another 27,000 jobs in September, more than 23,000 of them in the motion picture and sound recording industries. The sector overall has not suffered significant labor losses, because employees can work from home or use social distancing in the workplace. The information sector shed about 3,000 jobs in October, added 2,000 in November, and lost about 1,000 in December.

Local and national television programming is experiencing a jump in viewership as more people are home and tuning in for entertainment and coronavirus updates. However, local advertising spending has declined as many independent and small businesses cut back on nonessential expenses, like advertising. National and cable broadcasters experienced drops in advertising spending related to broadcast events, like college and professional sporting competition, although some of that revenue may bounce back as sports broadcasts have resumed.

Sales of books have skyrocketed, especially online, as consumers look for entertainment at home. Book publishers are moving promotions for new books online because traditional promotion in bookstores and libraries, as well as book tours, have been canceled.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The Information sector ranked 14th as about 40% of industry workers (management, and business, financial, and technical roles), have low scores for contact and/or proximity with others. The remaining segment of the information workforce (including art, design, media, sales, and office and administrative support) have medium scores for contact with others.

February 8, 2021

The effects of coronavirus on the leisure and hospitality industry are largely related to travel restrictions and cancellations, and reduced foot traffic due to social distancing. Hotels, airlines, resorts, cruises, restaurants and bars, theaters, amusement parks, convention centers and sports arenas are all suffering from revenue losses as consumers and businesses cancel travel, events, and conferences.

All states have taken steps toward reopening. After the pandemic subsides, the leisure and hospitality sector hopes to see a surge in demand as consumers become more confident about spending time in public and traveling. Amid the lockdown, some companies and venues refunded tickets, waived cancellation fees or issued credits. Hospitality and leisure venues closed to reduce operating costs, reserve cash, and take time to sanitize their properties and equipment.

Flights within and outside of the country have been limited. Aside from airlines and hotels, less travel also hurts airport operations, food service providers, ridesharing, and taxi and limo services.

Daily new COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. There were glimmers of air travel recovery during the summer but as 2020 neared its close new variants of the virus, worldwide spikes in new cases, and tighter travel restrictions put even more downward pressure on travel demand.

The rollout of vaccine distribution in December 2020 has provided hope that the leisure and hospitality sector might begin returning to normal in 2021. As of late January 2021, nearly 50 million doses of vaccine had been distributed and more than 29 million had been administered, according to the Centers for Disease Control and Prevention (CDC). The CDC has issued phased guidelines for prioritizing vaccine distribution but states are not required to follow them. Optimism on the rollout of vaccines has been tempered by the emergence of mutated coronavirus variants than are more contagious than the original virus and may be more resistant to vaccines. Some health experts suggest vaccine administration is in a race against the spread of the new virus variants.

As states reopen, so too have some restaurant dining rooms. To remain as safe as possible, distancing guidelines for restaurants include positioning tables farther apart, hand sanitizing stations, disposable menus, and operating at reduced capacity – in some cases 25%-50%. Concerns over the health of restaurant workers, food contamination risks, and consumers’ reluctance to venture out could thwart restaurants’ efforts to reopen. Some states have also moved to reopen bars under similar distancing guidelines that apply to restaurants.

Many workers in the sector are part-time and paid hourly. Restaurant and bar workers in particular rely on tips that can’t materialize when traffic slows or establishments shutter. The leisure and hospitality sector lost more than 7.2 million jobs in April, according to the Bureau of Labor Statistics. Foodservices and drinking places accounted for 70% of the jobs lost. All segments within the sector have since rebounded, but not completely. As a whole, leisure and hospitality employment in December was still 22% below pre-pandemic levels. In the arts, entertainment and recreation segment, December employment was off by 30% compared to February. Accommodation employment was down 32% during the same period, and food services and drinking places employment was off nearly 19%.

The sector benefited from federal funding and employment tax breaks that helped businesses weather the downturn without laying off workers. A fresh round of stimulus relief was passed in December. The $900 billion COVID-19 Economic Stimulus Relief Act included reauthorized the Paycheck Protection Program (PPP). The PPP extension includes $284 billion in funding for Small Business Administration (SBA) loans. The most recent round of PPP lets eligible borrowers get a second draw loan. It also simplifies loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible. However, some economy watchers feel that even more aid is necessary to stave off consumer and business defaults. The Biden administration has called for further stimulus spending. Negotiations over the cost and structure of any further stimulus are ongoing.

Businesses in this sector may run on very thin profit margins and require additional access to capital to maintain operations, pay suppliers, and meet payroll obligations. These firms may also struggle to pay creditors on schedule until revenue returns.

For the week ending January 30, US hotel occupancy was down 29.6% and revenue per room (RevPAR) dropped 50.6% to $36.23 compared to the same time in 2019, according to hotel data firm STR. The hospitality and leisure sector has been forced to furlough many of its workers because traffic is too low to justify full staffing. However, the hospitality industry has seen bookings and occupancy creep upward since the lows experienced in April.

Nightclubs have moved to online platforms, like Zoom, to hold virtual club experiences. They sell tickets online for access and may have dress codes. The clubs are hiring celebrity guest DJs to boost interest. Nightclubs are also getting corporate sponsors to pay for and promote virtual events. Industry watchers expect nightclubs to be among the last businesses to reopen and the nightlife industry might not fully return to normal until a vaccine is available. Some nightclubs with outdoor facilities have announced plans to reopen on a limited basis.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The accommodation and food services sector ranks 3rd as about 80% of industry workers are employed in tasks including food preparation, cleaning, and/or personal care activities that all have high scores for contact with others and require face-to-face interactions.

February 17, 2021 

The Institute for Supply Management (ISM) expects manufacturers to record a 6.9% year-over-year net revenue increase in 2021, reversing a 1.3% decrease during pandemic-plagued 2020. Fifteen of 18 industry sectors tracked by ISM are expected to record increases.

Analysts at investment bank and financial services company Goldman Sachs Group raised their gross domestic product (GDP) growth forecast in February, and predict economic growth of 6.8% in 2021, compared with a previous forecast of 6.6%. The increase came after economists raised their COVID-19 relief-package estimate to $1.5 trillion from $1.1 trillion.

The federal Equal Employment Opportunity Commission said in late December that employees may be barred from the workplace if they refuse the COVID-19 vaccine. “Requiring a vaccine is a health and safety work rule, and employers can do that,” said Dorit Reiss, a professor at the University of California Hastings College of Law. There are, however, some exceptions to a blanket requirement. A collective bargaining agreement may require negotiating with a union before mandating a vaccine. The Americans with Disabilities Act allows workers who don’t want to be vaccinated for medical reasons to request an exemption.

Wells Fargo analysts say that the manufacturing sector should be relatively insulated from the latest wave of coronavirus cases as restrictions have been targeted toward the service sector.

New orders for durable goods increased 1.1% year over year in December 2020 but were down 6.6% year over year for the full year, according to the US Census Bureau. Excluding transportation, new orders decreased 3.8% during 2020. Excluding defense, new orders decreased 6.6% year over year during 2020. New orders increased 1.1% month over month in December 2020, marking the eighth consecutive month-over-month increase.

The Institute for Supply Management’s monthly Purchasing Managers’ Index (PMI) fell to 58.7% in January from 60.5% in December. Any reading above 50% indicates expansion, while anything under 50% indicates contraction. The New Orders Index registered 61.1%, down from the December reading of 67.5%. The production index fell to 60.7% from 64.7%. The backlog of orders increased to 59.7% from 59.1%. The Employment Index rose to 52.6% in January from the December reading of 51.7%. Of the 18 manufacturing industries, 16 reported growth in January.

Manufacturing employment decreased 4.3% year over year in January but was up 6.9% from the pandemic-related low of April 2020, according to the US Bureau of Labor Statistics.

Manufacturing output increased 1% month over month in January, about the same as its average gain over the previous five months.  It was the ninth consecutive monthly gain.

February 8, 2021

An oil glut and plummeting global petroleum consumption sent oil prices into a tailspin in April 2020. By the fourth week of April the price of West Texas Intermediate (WTI) crude oil hit $3.32 per barrel. Agreements by OPEC and other major producers to cut production and gradual improvements in demand have since stabilized global oil markets; the WTI crude spot price in the fourth week of January was just a few cents below where it was the same week a year earlier. In January Saudi Arabia said it planned to cut its oil production through March to help prop up global prices. Higher oil prices provided a boost to US shale producers’ bottom lines amid recent cost reductions and flat output. Shale firms are expected to pump any price-related margin improvements into debt reduction or improving investor returns rather than pour it back into production.

Longer-term, oil demand will depend on the world getting back to driving and flying in large numbers. That felt a little closer in December when several countries, including the US, began distributing COVID-19 vaccines. Optimism on the rollout of vaccines has been tempered by the emergence of mutated coronavirus variants than are more contagious than the original virus and may be more resistant to vaccines. Some health experts suggest vaccine administration is in a race against the spread of the new virus variants.

Daily new US COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times.

The number of oil rigs in operation is down significantly. The US rig count as of January 29 was 384, up 6 from the prior week but down 406 from a year ago, according to Baker Hughes Rig Count. However, as oil prices have improved, rig counts have gradually ticked upward, especially in the Permian Basin.

Natural gas prices are expected to maintain an upward trend in 2021, according to the Energy Information Administration (EIA). Total US natural gas consumption is expected to fall 2.8% in 2021 compared to the prior year as higher natural gas prices reduce gas use in the power sector.

Coronavirus is affecting the oil and gas industry in terms of downstream demand for refined products like gasoline and diesel fuel, as well as electricity. Changes in demand for quarried products like stone and gravel likely won’t be felt until after the pandemic eases and the construction market is reassessed. Construction projects may be postponed as businesses evaluate their finances and ability to invest in new structures and building developments.  Likewise, metal ore mining will wait to see how manufacturing demand shifts for steel and aluminum materials and how quickly foreign suppliers are able to restart production and get their products to the US market. In the near term, international trade of oil, gas and mined products has slowed.

Total US electricity consumption is projected to rise 1.5% in 2021 after falling 4% in 2020 amid reduced demand from the commercial and industrial sectors, according to the EIA. However, industrial and commercial consumption are expected to rebound in 2021. Consumption in the commercial sector is expected to rise 0.9%, while industrial consumption will increase 1.2%. Colder weather in 2021 is forecast to increase demand for electricity used for residential heating and as consumers continue to spend more time at home. Residential electricity sales are projected to rise 2.4% in 2021.

The coal mining industry, which has struggled for years under environmental regulations and worker health and safety issues, could be hurt significantly. Nearly all of the coal mined in the US is used to produce electricity, but energy producers are switching to natural gas and renewables that are cheaper and cleaner. In addition, highly contagious diseases like coronavirus have the potential to spread more easily in coal mines, due to their enclosed structure. Miners may also have underlying respiratory conditions, such as Black Lung, which could increase the severity of symptoms. Coal production for the week ended January 30, 2020 was down more than 10% from a year ago. Full-year coal production in 2020 is estimated to have declined 24% amid reduced demand from electricity producers in the US and in coal export markets. Coal production is projected to rise 12% in 2021 as natural gas prices move higher and coal becomes more competitive for the electric power sector.

Sales of minerals used in pharmaceuticals could increase if the nation demands more drugs and components be produced domestically to reduce reliance on foreign suppliers, prevent shortages, and speed products to market. The CARES Act provides billions in funding for the domestic development and manufacture of coronavirus vaccines and treatments. A second stimulus package passed in late-December includes $20 billion for vaccine purchases, $9 billion for vaccine distribution, and $22 billion to help states with COVID-19 testing, contact tracing, and other mitigation efforts.

Firms that support the various mining and extraction segments are also hurt when mines are closed, production levels decline, material processing slows, and funding for exploration and drilling is postponed or cut.

In January, the EIA estimated annual average crude oil projection in 2020 fell to 11.3 million barrels per day (b/d) from 12.2 million b/d in 2019. Production is expected to decline further to 11.1 million b/d in 2021. Many producers have announced reductions in capital spending and drilling activity.

Five oil producing firms filed bankruptcy in Q1 2020, 18 did so in Q2, another 17 filed in Q3, and six filed in Q4, according to Houston-based law firm Haynes and Boone. More bankruptcies may be likely as small and highly leveraged firms fall under the financial pressure. Industry watchers do not expect oil demand and prices to rebound until the COVID-19 pandemic is over and pre-pandemic patterns of life return.

Weak demand and low oil prices may be leading to further industry consolidation, especially in the shale oil segment of the industry, according to The New York Times. In October, Chevron completed its purchase of Nobel Energy Oil. In early January, Devon Energy and WPX Energy completed their merger of equals for $2.6 billion. Later that month, ConocoPhillips completed its acquisition of shale driller Concho Resources for $9.7 billion. Industry watchers suggest oil producers are joining forces primarily to trim costs whereas prior to COVID-19 companies merged to boost growth or gain asset diversity – cost synergies were just a bonus. Some oil insiders are predicting it could be 2022 before oil demand and prices recover while others wonder if demand might have peaked in 2019.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The manufacturing sector ranks 17th as only about 40% of the workforce has a medium score for contact with others.

 

February 8, 2021

The professional services sector could see a change in how it conducts business after the coronavirus pandemic. Firms are handling business in small isolated groups, are allowing employees to work from home, and are staying connected through the use of telecommunications and technology.

For some professional services firms, remote working or working in an office with a small group of people who can social-distance is easy and so business continues with fewer physical disruptions. Other segments of the professional services sector are very hands-on with clients and frequently travel to work at their clients’ sites. Those industries are figuring out ways to conduct business and stay connected with colleagues and clients while limiting or halting travel. Employees are calling and video chatting with each other and clients as well as sending documents electronically. Firms are also limiting meeting size.

Law firms are allowing employees to work from home. Courthouses have begun to reopen, depending on the jurisdiction. At the height of the pandemic civil trials were postponed and criminal trials continued but many courthouses limited visitors. Prisons are halting in-person visitations and using video conferencing technology instead. The filing of court documents, like wills, was delayed as courthouses operated with smaller staffs.

Legal and consulting work related to business mergers and acquisitions (M&A) is starting to pick up after deals were put on hold earlier in the pandemic. Global M&A activity finished 2020 with more than $3.1 trillion worth of deals, according to Mergermarket. US M&A activity in 2020 reached more than $1.2 trillion, down more than 20% from the nearly $1.6 trillion in deals seen in 2019. However, the value of US deals in Q4 2020 reached $545 billion, an all-time high.

After the pandemic subsides, legal and consulting services firms could see a more robust increase in demand for private-equity and restructuring services. Consulting firms will see a jump in business as clients look to recover their businesses and understand how their supply chains are affected. It’s also speculated that the legal services industry could experience a rush of M&A activity itself, as well-capitalized firms buy smaller struggling ones, and top employees are hired away.

Biological testing labs are helping government labs process test kits and speed results of coronavirus tests. Commercial and academic labs are also developing new coronavirus tests. Biotechnology firms are helping to develop vaccines. Hope for ending the pandemic intensified in December as two vaccines began being distributed. Both of the vaccines (one developed jointly by Pfizer and Germany-based biotech firm BioNTech, and the other developed by Moderna) proved more than 90% effective in clinical trials, and require two doses to achieve full effectiveness. As of late January 2021, nearly 50 million doses of vaccine had been distributed and more than 29 million had been administered, according to the Centers for Disease Control and Prevention (CDC). Three more vaccines have shown strong effectiveness in clinical trials and are awaiting FDA approval – one from Moderna, another by a partnership between AstraZeneca and Oxford University, and one from Johnson & Johnson. In addition to the announced vaccines, there are more than 70 potential vaccines currently in development globally, according to The New York Times. About 30 of them are in clinical trials. COVID-19 antibody testing is a bright spot for biotech labs.

In recent months, testing capacity has improved. While new daily cases of COVID-19 rose in October and November, so did the number of tests. Health researchers think pooled testing can improve testing further. With pooled testing, tests are done in small batches. If the pooled test comes back negative, everyone in the batch is negative. If the pooled test is positive, unused portions of the original samples are retested individually. Pool testing is thought to be of the most use in areas with low rates of infection where most pooled tests would come back negative, thereby getting quicker results while conserving resources.

Consumer-focused professional services firms such as veterinary offices, tax preparers, interior designers and portrait studios are at increased risk due to the high volume of clients encountered daily. Some are temporarily closing their doors, others are working remotely and connecting with clients virtually. Veterinarians experienced an 9.6% increase in daily revenue per practice the week ended February 2, 2020 compared to the same day a year ago, according to Vet Success. The number of visits was flat during the same period. With less travel, demand for pet boarding is down.

Tax preparers may see a decline in demand as individuals and small businesses opt to file online to avoid contact. The IRS has modified tax regulations to ease the burden on the tax preparation industry, businesses, individuals and the IRS. CPAs are helping clients navigate the benefits and requirements of receiving funds through the CARES Act, managing their businesses with limited resources, and preparing financial records.

Architecture and engineering firms could see a delay in new business as clients assess their ability to build new homes, facilities and developments, as well as invest in machinery to bring newly engineered products to market. Firms will likely continue to develop clients’ existing projects, but may see a delay in implementation. Business for interior design services has slowed as corporate and individual clients temporarily limit outside contact and reassess their spending. A survey by the American Society of Interior Designers in early January 2021 found that 40% of designers felt their businesses will recover in less than a month after the epidemic ends; about 23% felt it would take 6-12 months to recover. Top concerns of interior designers included business development, product availability, and procurement/delivery processes and timelines.

Advertising agencies, PR firms, and graphic designers are flooded with customer requests to create coronavirus related materials and communications. However, advertising firms have seen significant cuts in advertising and promotion spending. Some online promotional content related to the coronavirus has been blacklisted.

The professional and technical services sector lost nearly 540,000 jobs in April. The most affected industries included computer systems design, architectural and engineering services, management and technical consulting, and accounting and bookkeeping. Just over 10% of the jobs lost in April returned in May – about 65,000. Another 62,000 jobs returned in June. The June job gains were mostly for accounting and bookkeeping services and other professional and technical services. The computer systems design industry lost an additional 20,000 jobs in June. The sector added 170,000 jobs in July and another 197,000 in August. By January 2021, sector employment was only 1.4% below pre-pandemic levels. The professional and technical services sector gained 40,000 jobs in January. The biggest gains were in business management and consulting services (up 16.1%), computer systems design and related services (+11.3%), and scientific research and development services (+10).

All states have taken steps toward reopening. However, daily new US COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. To keep workers and consumers safe, consumer-facing professional services firms such as veterinary offices, tax preparers, interior designers, and portrait studios may have to develop new policies that set guidelines and procedures for social distancing compliance while maintaining efficient customer service.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The professional, scientific, and technical services sector ranks 13th. Most of the roles in the sector (science and computer operations, business and financial operations, management, and engineering and architecture) have medium-to-low scores for physical proximity. About 17% of sector jobs are office and administrative support positions and require some contact with others.

February 8, 2021

The retail sector has experienced mixed results stemming from the coronavirus outbreak and efforts to contain its spread. Retail sales fell nearly 18% in April, but have since been on a gradual recovery trend. Full-year retail sales finished 2020 up 3.5% over 2019. Non-store retail – which includes ecommerce – led all retail categories with growth of more than 22% in 2020. Other strong categories included building material and garden equipment and supplies dealers (+14%), and food and beverage stores (+11.5%). Several retail industries suffered significant sales declines in 2020, including clothing and accessories stores (-26.4%), department stores (-18.1%), gasoline stations (-15.9%), electronics and appliance stores (-14.6%), and furniture and home furnishings stores (-5.4%).

As a whole, the retail sector lost more than 2 million jobs in April. Among the hardest hit were clothing and clothing accessories stores; motor vehicle and parts dealers; furniture stores; sporting goods, hobby, book, and music stores; and department stores. Most retail segments saw employment gains in May as the overall sector added nearly 370,000 jobs. The sector added nearly 740,000 jobs in June. Nearly 260,000 retail jobs were added in July, and another 250,000 were added in August, and by that month all retail sectors had returned to positive job growth. Another 142,000 retail jobs were added in September, and sector employment rose by more than 100,000 in October. Retail sector employment declined by nearly 35,000 jobs in November. Then 135,000 jobs were added in December; the retail sector shed nearly 38,000 positions in January. Job losses in January were mostly in general merchandise stores, and electronics and appliance stores. In January 2021, retail employment was only less than 2% below the same month a year earlier.

Early in the pandemic, grocery and drug stores as well as mass merchandisers like Walmart, Costco and Target struggled to keep products on the shelves as consumers and businesses stockpiled goods in fear of shortages. In most cases supply chains have since stabilized as some grocers reduced hours of operation, and limited quantities that a single shopper can purchase. Stores are also controlling traffic in the store to allow for social distancing. Some retailers have allowed customers to purchase in-stock merchandise online, then pick it up curbside. On Black Friday 2020, in-store and curbside pickup rose more than 50% over the same day in 2019, according to Adobe. Retailers that offered curbside pickup on Black Friday increased digital sales nearly 20% compared to those that didn’t offer curbside, according to Salesforce. Industry watchers expect curbside pick-up to have a long-term effect on store-based retailer strategy even after the pandemic eases. Curbside offers a hybrid model between ecommerce and traditional retail that satisfies consumers’ desire to visit stores, and shoppers take care of the “last mile” – the delivery step that is most costly for retailers.

Stores located in malls that closed during the lockdown had no choice but to follow the malls’ leads and shutter. State and local governments also mandated closures, taking the option to remain open out of retailers’ hands. All states have taken steps toward reopening, including retail establishments. The lifting of restrictions come with social distancing requirements, such as retailers operating at reduced capacity. Daily new US COVID-19 cases began rising rapidly in the fall and winter. By early February, the 7-day average for new cases was more than 130,000, but new cases, hospitalizations, and deaths were trending downward. As of February 3, about 13 states had a mix of business closures and two were mostly closed, according to The New York Times. As the pandemic has worn on, several major retailers are requiring customers to wear masks, but are instructing employees to not be confrontational with customers who refuse to comply. As of February 5, mandatory mask orders were in place in 34 states, according to The New York Times. Only 10 states have no restrictions regarding masks.

The retail workforce is largely comprised of part-time employees that are paid hourly wages. Employees of dealerships and showrooms often earn commissions based on sales value and volume, which has suffered due to low foot traffic. Retailers can benefit from federal funding and employment tax relief aimed at preventing permanent business closures and worker layoffs. However, retail employees tend to work in close proximity to consumers and have an elevated risk of exposure to the virus.

A recent report by Deloitte ranked 20 major industry sectors according to the risks workers face in possibly encountering the coronavirus on the job. Risk factors taken into account include contact with others, face-to-face discussions, exposure to disease or infections, and physical proximity to others. The rankings run from 1-20 with 1 being the lowest risk and 20 being the highest. The retail sector ranks 5th as about 90% of employees have medium or high scores for physical proximity and contact with others.

More consumers have turned to online shopping to order groceries and pick them up curbside or have them delivered. Analysts suggest the retail sector was in a downturn before coronavirus. The trend is likely accelerated, and brick and mortar stores could see greater declines in traffic after the epidemic as shoppers became more comfortable with online shopping during the quarantine. In 2020 the retail sector suffered its worst year for bankruptcies since 2010, according to S&P Global Market Intelligence. Malls and retailers of luxury and nonessential products – such as clothing, jewelry, and furniture – have faced steep declines in store traffic. Some clothing retailers that specialize in office clothing are struggling as more people work from home. In July, high-end men’s suit retailer Brooks Brothers filed for bankruptcy, and Ascena Retail Group (owner of Ann Taylor and Lane Bryant chains) filed Chapter 11 later that month.  In late-December, Ascena sold its Ann Taylor, LOFT, Lou & Gray, and Lane Bryant brands to Premium Apparel LLC, a subsidiary of private equity firm Sycamore Partners. Men’s Wearhouse and JoS. A. Banks owner Tailored Brands filed for Chapter 11 bankruptcy protection in August. Tailored brands emerged from Chapter 11 in December. About 30 major US retailers filed for bankruptcy in 2020, according to Retail Dive

A fresh round of stimulus relief was passed in December. The $900 billion COVID-19 Economic Stimulus Relief Act included reauthorized the Paycheck Protection Program (PPP). The PPP extension includes $284 billion in funding for Small Business Administration (SBA) loans. The most recent round of PPP lets eligible borrowers get a second draw loan. It also simplifies loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible. However, some economy watchers feel that even more aid is necessary to stave off consumer and business defaults. The Biden administration has called for further stimulus spending. Negotiations over the cost and structure of any further stimulus are ongoing.

The volume of retailer containers coming into US ports rose 24.5% in November compared to a year earlier, according to the January 2021 Port Tracker report compiled by the National Retail Federation (NRF) and maritime consultancy Hackett Associates. The report covers 13 major US ports on the West, East, and Gulf coasts. The Port Tracker’s January report expects December imports to rise 17.3% year-over-year and January 2021 to increase 7.7%. February volume is expected to rise 6.1% compared to January 2020, and March is projected to see a 19% gain. Full-year 2020 retail container volumes are projected to be up 1.5% compared to 2019, breaking the previous record set in 2018.

 

February 17, 2021

Total US wholesales sales increased 5% in value year over year in December but decreased 4.1% in value year over year for all of 2020. Durable good sales increased 7.9% in value year over year in December but decreased 2.6% in value year over year for all of 2020. Non-durable good sales increased 2.4% in value year over year in December but decreased 6.4% in value year over year for all of 2020.

Warehouse construction will lead the 3% growth expected in the nonresidential construction sector as e-commerce giants continue to build out their logistics infrastructure, according to the Dodge Data & Analytics 2021 Dodge Construction Outlook. Wholesalers may pay more for storage facilities because the pandemic-driven rise in e-commerce is driving up demand. GlobeSt.com expects demand for storage space to continue rising if firms follow through with plans to rely less on just-in-time logistics planning by increasing inventories.

Analysts at investment bank and financial services company Goldman Sachs Group raised their gross domestic product (GDP) growth forecast in February, and predict economic growth of 6.8% in 2021, compared with a previous forecast of 6.6%. The increase came after economists raised their COVID-19 relief-package estimate to $1.5 trillion from $1.1 trillion.

The Internal Revenue Service received 4.3 million Employer Identification Number applications in 2020, up 24% year over year despite the spring shutdowns. Wholesalers may benefit from the increasing number of businesses. “High-propensity” applications, which have characteristics suggesting that the future businesses will have employees, increased 16% in 2020.

Wholesale inventories decreased 1.2% in value year over year in December 2020. Durable goods inventories decreased 3.9% while non-durable goods inventories increased 2.7%.

How Canadian Sectors Are Affected

Feb 25, 2021 – Tighter Travel Restrictions Complicate Flow of Migrant Labor

  • In early May, Canada’s federal government passed an agricultural relief package that added $125 million to the AgriRecovery fund, a program that helps farmers weather disasters. Another $77 million will help food processors expand capacity while providing protective equipment to workers. The plan will also provide $50 million for surplus food purchases which will be used to supply food banks. In mid-May, Canada’s federal government announced $469 million in new programs to help fish harvesters who had been ineligible for benefits under previous plans. The Fish Harvester Benefit offers income support of up to 75% of losses for harvesters who lose 25% or more on their 2020 income. The Fish Harvester Grant offers up to $10,000 of non-repayable support to self-employed harvesters. The Fish Harvester Benefit and Grant closed on October 19.
  • In July, Canada established the Emergency On-Farm Support Fund to help the country’s agricultural sector cope with the added costs of mitigating the effects of coronavirus and keep workers and consumers safe. On a cost-share basis between the federal and provincial government the initiative – administered through the Canadian Agricultural Partnership program – will provide C$35 million in financial assistance to agricultural product processors and distributors. The program will pay for half of project costs (up to C$100,000 per applicant) for personal protection equipment and sanitation supplies, business continuity and training, and equipment modifications necessary for promoting social distancing.
  • Canada’s agriculture sector is faring better during the pandemic than Canadian small business overall, according to a recent update of the Canadian Federation of Independent Business (CFIB)’s Small Business Recovery Dashboard. As of late-November, the CFIB says that about 63% of Canadian businesses are fully open, 41% are fully staffed, but only 29% are experiencing normal sales. Agriculture-related small businesses believe their businesses will fully recover in 10 months compared to an average of 17 months for small businesses across all sectors. To help Canadian agriculture better contribute to the country’s economic recovery, the CFIB has encouraged provincial agriculture ministers to address policy reforms including taxation, labor shortages, global trade, and business risk management programs.
  • Canada’s food industry relies on about 50,000 migrant workers. If workers become ill or their movements are restricted, food processers’ supplies could run short and prices may rise. Migrant agricultural workers have been one of Canada’s hardest hit groups. The pandemic’s effect on migrant workers has led some advocates and industry insiders to call for reforms, including paths to permanent residency status. In July Canada’s government moved to boost protections for temporary foreign workers including C$6 million in direct support through migrant worker support organizations, more than C$16 million to improve employer inspections. Support also includes the C$35 million Emergency On-Farm Support Fund to improve living quarters, and provide additional sanitizing stations and PPE.
  • In early January 2021, Canada put new travel restrictions in place requiring visitors entering Canada to have had a negative COVID-19 test within 72 hours of having boarded their flight. Migrant worker advocates argue the requirement puts an undue burden on migrant agricultural and food workers who may not be able to afford high testing costs in their home countries, according to the CBC.In late January, Canada announced further restrictions that will require travelers to also take a polymerase chain reaction (PCR) test upon arrival in Canada, then quarantine at their own expense in a government-approved hotel for up to three days pending test results. Canada’s federal government later waived the hotel quarantine requirement for temporary foreign agricultural workers. The waiver allows migrant workers who test negative upon landing to proceed to quarantine facilities provided by their employers. The waiver is a stop-gap solution. Federal and provincial governments hope to have a more refined policy in place by Mid-March. All travel between Canadian airline services to Mexico and the Caribbean, where many of Canada’s migrant workers originate, has been suspended through April 30, 2021. Additionally, all of Canada’s inbound foreign air travel is restricted to four airports in Vancouver, Toronto, Calgary, and Montreal. The restrictions have left some agricultural producers and fishing operations wondering how they will get workers.
  • Outbreaks of COVID-19 in Canadian meatpacking plants disrupted food supplies. Two of the affected plants in Alberta account for 85% of Canada’s beef slaughter capacity. To prevent further outbreaks, meatpacking plants have issued PPE to workers, staggered shifts and break times, and installed barriers between workstations. However, industry watchers wonder if meatpackers can remain profitable with such measures in place. Canada’s meat industry will likely increase automation as a longer-term solution. After a string of outbreaks in a pork plant in Alberta, unionized plant workers began calling for a possible strike in mid-February. The plant was shut down, but union officials reported calling for a shutdown since January. The plant’s workers are represented by the United Food & Commercial Workers (UFCW) union, which has about 35,000 additional workers in Alberta’s meat processing and grocery industries. The UFCW wants its members to be a higher priority for vaccinations, higher pay, pay that continues during plant closure, a guarantee of PPE for workers, and plexiglass dividers between workers.
  • In January, Canada’s agriculture employment was more than 245,000, down more than 20,000 jobs compared to March. Forestry and logging employment was up by about 1,000 from March to 44,000 in January. Fishing, hunting and trapping employment peaked at 26,000 in May, up more than 10,000 compared to March levels, but has since fallen back to about 18,000 by January. On a monthly basis, agriculture employment was down 5% in January. Forestry and logging was down 22%. Fishing, hunting, and trapping employment rose 2%.
  • The Canada Emergency Response Benefit (CERB) provided payment benefits for seasonal workers, including fishermen and farm hands, who exhausted their Employment Insurance (EI) and can’t work due to COVID-19 closures. However, CERB expired in early October. In August, Canada’s federal government created a C$37 billion plan that increases accessibility to EI and provides three new relief benefits which aim to help workers who do not qualify for the EI expansion. The new benefits are the Canada Recovery Caregiving Benefit (for workers who need to stay at home to provide care to another person), the Canada Recovery Sickness Benefit (helps workers who are ill or must isolate due to COVID-19), and the Canada Recovery Caregiving Benefit (for workers, including self-employed and gig workers, not covered under EI or the two other programs).
  • Despite the pandemic, summer housing booms in Canada and the US have driven up demand for logs used to make lumber, driving lumber prices higher. Low mortgage interest rates and homebuying demand that was pent up during the lockdown have contributed to rising housing demand. Canadian housing starts rose more than 23% in January 2021 compared to December, according to the Canadian Mortgage and Housing Corporation (CMHC). Housing starts were more than 280,000 units in January compared to about 229,000 the prior month. The value of Canada’s building permits dropped 4% in December compared to November. Residential permits were down about 1% as a 7.2% decline in multi-family permits offset a 7% rise in permits for single-family dwellings. About 65% of Canada’s dimension lumber production is exported to the US for home construction; Canada’s homebuilders account for about 10%, according to Madison’s Lumber Reporter.

Feb 25, 2021 – Ecommerce Demand To Drive Warehouse Construction

  • Canadian housing starts rose more than 23% in January 2021 compared to December, according to the Canadian Mortgage and Housing Corporation (CMHC). Housing starts were more than 280,000 units in January compared to about 229,000 the prior month. The value of Canada’s building permits dropped 4% in December compared to November. Residential permits were down about 1% as a 7.2% decline in multi-family permits offset a 7% rise in permits for single-family dwellings. Overall, the value of nonresidential permits fell 10.8% as Industrial building permits declined 24.4%, and commercial permitting dropped 9%. Institutional and government permits were off 6.1% in December. Led by permitting for multifamily housing in Ontario and British Columbia, residential permits set new records by topping the previous high set in September 2020, according to Statistics Canada.
  • Canada’s home sales took off unexpectedly during the summer of 2020. Home sales rose 63% in June compared to the month before, according to the Canadian Real Estate Association (CREA). Sales saw another monthly gain of 26% in July and set a new record high. Home sales grew 6.2% in August. Sales moderated in September, with a month over month increase of 0.9%. Home sales pulled back further in October with a drop of 0.7%, but sales were up more than 32% compared to October 2019. In November, home sales rose 1.6% then jumped 7.2% in December. Home sales growth slowed to 2% in January on a month-over month basis, hitting an all-time record. Sales were up 35.2% compared to January 2020. Low interest rates, government income supports, and pent-up demand accumulated during the lockdowns have helped drive housing demand. The CREA believes housing demand will continue in 2021, but will continue to face challenges from COVID-19 and lack of adequate inventory.
  • Nonresidential building construction investment was flat in December 2020 compared to the prior month, remaining at $4.4 billion for the third consecutive month. Investment in the institutional segment rose 0.9% over November, primarily due to growth in British Columbia. Commercial building investment rose 0.3% on growth in Ontario. Industrial investment was down 0.2%.
  • The construction sector shed more than 56,000 positions in January as much of the country was under tight stay-at-home restrictions. The losses followed a drop of 2,900 jobs in December, but more than 26,000 positions were gained in November. About 2,500 jobs were lost in October after construction employment fell by 7,000 in September. Construction employment rose by about 7,000 jobs in August, another 7,000 in July, 83,000 in June and 73,000 in May. Canada’s construction employment in January was more than 4% lower than the same month a year earlier.
  • Construction firms that have experienced decreases in year-over-year gross revenue may apply for assistance under the Canadian Emergency Wage Subsidy (CEWS). The funds are to be used for payroll and business expenses. Originally set to expire the first week of June, CEWS has been extended four times and is now set to run through June 2021. In early January, Canada’s government made changes to the CEWS program that set the maximum top-up subsidy rate at 75% for companies with a revenue drop of 70% or more. The CEWS program has lower-tiered top-up subsidy rates for companies’ whose revenue declines have been less severe. As of February 14, 2021, the CEWS program had paid more than C$65 billion to more than 425,000 employers.
  • Large construction firms could benefit from the Large Employer Emergency Financing Facility (LEEFF) program. Announced on May 11, LEEFF aims to keep companies that have been hit hard by the epidemic operating and enable them to retain their workers.
  • The huge spike in Canadian ecommerce sales during the pandemic is expected to drive a warehouse space construction boom, according to real estate brokerage firm CRBE. Over the next five years, an additional 40 million square feet of warehouse space will need to come online to support the continued growth of ecommerce in Canada. As retailers have scrambled to develop logistics hubs, Toronto, Vancouver, and Montreal have become some of the tightest markets in North America for industrial space. Canada’s retail ecommerce sales in in 2020 increased more than 70% over the prior year, according to Statistics Canada.
  • In March, large construction firms in Ontario will begin giving up to 40,000 rapid antigen tests per week to help slow the spread of COVID-19 on jobsites. The testing initiative is part of the Ontario Ministry of Health’s COVID-19 Rapid Antigen Test Pilot, which included the testing of construction firm EllisDon’s workers since December. In the program, workers are tested twice per week at the start of their shift. The antigen test detects proteins associated with the virus and results are available in 15 minutes. The frequency of screening and the rapid test results should help with early detection among asymptomatic workers.

Feb 25, 2021 — Biden Blocks Keystone XL Pipeline

  • On average, a Canadian oil sands producer can generate enough cash to operate with a US benchmark West Texas Intermediate (WTI) price of $37.30 a barrel, according to Canadian Imperial Bank of Commerce analyst Jon Morrison. The spot price for WTI crude was $58.45 the week ending February 12, 2021.
  • Less travel and commuting have reduced global oil demand. However, production cuts and a slight uptick in global fuel consumption have helped oil prices recover somewhat. Oilfield services firms have cut pay and laid off workers as oil supply far outstripped demand and prices fell. The mining, quarrying, and oil and gas extraction sector employment has gradually rebounded since the onset of the pandemic. In January 2021, sector employment was 2.5% above levels seen in March 2020. In January 2021, the Canadian Association of Petroleum Producers (CAPP) estimated 2021 capital spending in Canada’s oil and gas industry would rise 14% to $27.3 billion after notching $24 billion in 2020, the lowest level in more than a decade. Capital spending in Canada’s oil and gas sector rose 11% in the third quarter of 2020 after dropping 52% in the second quarter, according to Statistics Canada.
  • The coronavirus pandemic has worsened the outlook for Canada’s oil sands. Environmentalists have argued against oil sands development and have slowed pipeline efforts to bring the oil to market. These pressures and low prices have prompted several international oil companies to cease their investments. In 2020, France’s Total wrote down the value of its oil sands assets by more than C$9 billion, cancelled its membership in CAPP, and said it considered Canada’s oil sands to be stranded assets, along with other high-cost, high-carbon resources that were to be produced after 2040. Capital investment in Canada’s oil sands is expected to reach $7.3 billion in 2021 compared to $20 billion for conventional oil and natural gas.
  • On his first day in office, President Joe Biden cancelled TC Energy Corp.’s permit to move oil sands crude into the US through the Keystone XL pipeline, according to Bloomberg. The Keystone XL pipeline was originally blocked by president Obama, but the permit was reinstated by President Trump during his first few days in office. Opponents of the Keystone XL pipeline argue it runs through environmentally sensitive lands and encourages further investment in oil sands, which have a higher carbon footprint than conventional light crude. Supporters of the pipeline say it will bring jobs and economic growth to both sides of the US/Canada border.
  • Canada’s oil production for 2020 is projected to drop 7% as the pandemic curtailed demand and sent prices lower. The Canada Energy Regulator expects Canada’s oil production in 2020 to decline by 335,000 barrels per day (bpd) compared to 2019.
  • The drastic drop in global oil consumption as a result of COVID-19 has made some industry watchers wonder if peak crude demand – once thought about a decade away – is here already. Nearly every major oil company in the world wrote down the value of its assets in 2020 amid the collapse in global oil demand and prices. Industry watchers estimate the total value of the 2020 write-downs exceeded $US150 billion.
  • Large energy extraction & mining companies could benefit from the Large Employer Emergency Financing Facility (LEEFF) program. Announced on May 11, LEEFF aims to keep companies that have been hit hard by the epidemic operating and enable them to retain their workers. LEEFF comes with stringent environmental and climate change reporting requirements which industry watchers believe most oil and gas companies will be able to meet.
  • Maintaining social distancing in many mining operations is difficult. Miners work closely in confined spaces, and share communal living quarters in remote areas. Mines may also increase risks for nearby communities as workers commute.
  • EY’s Canadian Mining Eye index rose 9% in the fourth quarter 2020 after seeing a 10% increase in the previous quarter. Gold prices were off slightly with a decline of 0.1% in Q4 amid vaccine announcements and a weaker US dollar. Base metal prices – including copper, nickel, and zinc – have also enjoyed price gains on increased demand in China spurred by infrastructure stimulus spending. EY Canada expects gold prices to remain positive, supported by the weakness of the US dollar, expectations for inflation, and declining yields. Copper and zinc prices are projected maintain an upward trend due to COVID-19 vaccine breakthroughs and sustained demand from China.

Feb 25, 2021 – Calls For Domestic Vaccine Production Rise Amid Delays

  • Canada’s federal government has allocated more than C$25.6 billion in health and safety spending to help mitigate the impact of coronavirus. The funding is largely devolved to the provinces and territories, and targeted to the health care system. Federal funding distributions include C$2 billion for personal protective equipment (PPE) and C$240 million for virtual healthcare programs for both primary care and mental health. Canada has budgeted more than C$1.1 billion for COVID-19 research and vaccine development, including purchases of COVID-19 vaccine doses abroad. However, shipments of vaccines to Canada slowed in January and February. Pfizer cancelled an entire shipment to Canada from a plant in Belgium that was undergoing upgrades to boost production. Moderna also slowed shipments to Canada. Canada’s government is funding Quebec’s Medicago in its effort to develop a plant-based vaccine. Canada has also invested in the Novamax vaccine, but neither the Novamax nor Medicago vaccines are expected to be available soon. By mid-February, Pfizer vaccine deliveries resumed, which Prime Minister Trudeau said will allow Canada to meet its goal of distributing six million doses by the end of March, according to The New York Times. Officials inside Canada’s federal and provincial governments suggest the delays, and the emergence of new virus variants, highlight the need for Canada to reduce its dependence on foreign vaccine producers and develop its own manufacturing capacity.
  • Amid rising infection rates and the emergence of more virulent coronavirus variants, several Canadian provinces reintroduced tighter restrictions in January. Ontario issued a stay-at-home order on January 14, 2021 for the entire province. For much of February, stay-at-home-orders in Ontario’s public health districts were gradually lifted. Toronto’s stay-at-home-order was among the last three to be lifted on February 22. New restrictions were also put in place in January in Alberta (eased February 8), British Columbia (extended indefinitely on February 5), Quebec (eased February 8), and Manitoba (eased February 12). Canada’s prime minister has urged Canadians to avoid travel. In December, Canada’s federal government began requiring travelers to have had a negative COVID-19 test at least 72 hours prior to boarding their flight. In late January, Canada announced further restrictions that will require travelers to also take a polymerase chain reaction (PCR) test upon arrival in Canada, then quarantine at their own expense in a hotel for up to three days pending test results. If the test is negative, Canadians can spend the remainder of their two-week quarantine at home.
  • Healthcare costs in Canada were rising prior to the pandemic, but the COVID-19 crisis is driving costs even higher, according to a late-October report by the Conference Board of Canada. Health care costs are projected to rise much faster than growth rate of the Canada Health Transfer – the federal government’s contribution to health care funding in Canada’s provinces. To keep pace with rising costs, Canada’s federal government will have to increase its share of total funding to 35% from the current 22%, according to Quebec Premier François Legault, Chair of the Council of the Federation. The Conference Board of Canada estimates that the added healthcare costs from COVID-19 will be between C$20.1 billion and C$26.9 billion in 2020-21 and between C$15.7 and $21.9 billion in 2021–22.
  • The healthcare and social assistance sector gained more than 41,000 workers in July (after adding more than 140,000 in May and June and losing more than 240,000 in April and March). Losses in March and April were largely related to closures of medical practitioners’ offices (i.e. physicans, dentists, chiropractors) during the quarantines. The sector added about 10,000 August then shed about the same number in September. More than 17,000 healthcare and social assistance jobs were added in October. The sector shed about 2,300 jobs in November and another 6,000 in December, then added 18,500 jobs in January 2021. Healthcare and social assistance employment has been about on par with pre-pandemic levels since October 2020.
  • As of February 21, 23.7 million people were tested for coronavirus in Canada. Over 845,000 cases were confirmed and nearly 22,000 deaths were reported.
  • Some health experts hope the lessons learned during the pandemic about the benefits of telehealth will prompt Canada’s healthcare system to make further investments in it. Proponents say expanding telehealth will increase timely access to care, especially in rural areas. Telehealth also allows clinicians to treat patients more efficiently and has the potential to significantly reduce costs for both patients and Canada’s healthcare system. In February, the Canadian Medical Association called out several specific steps to make virtual care a permanent part Canada’s healthcare system. Key steps include specific public funding for virtual care, building out internet connectivity to remote areas to ensure equitable access to virtual care, establishing patient privacy standards, and creating a framework of safety and quality-of-care regulations.
  • A high number of Canada’s deaths from COVID-19 have occurred in nursing homes, which has prompted some healthcare experts and policymakers to call for reforms. While Canada’s healthcare system is publicly funded, long-term care relies on a blend of public and private payment. About 15% of Canada’s total healthcare spending comes out-of-pocket, according to health research nonprofit The Commonwealth Fund. Some suggest the out-of-pocket expenses allow for gaps in quality of care, and contributes to low wages in nursing homes and high turnover.

Feb 25, 2021 — COVID-19 Worsens Manufacturing Labor, Skills Gap

  • Canada’s manufacturing sales declined 3.9% in December 2020 compared to the same month a year earlier. Sales were up 0.9% from November. Monthly gains in December were led by wood products which saw a rise of 8.3% on higher prices. Petroleum and coal products rose for the third consecutive month with 4.7% sales growth amid strong energy and petroleum prices. Other contributors to December growth included food (+1.2%), paper (+2.7%), and fabricated metal products (+1.4%). Improved sales of motor vehicles, motor vehicle parts, and railroad rolling stock helped transportation equipment sales return to growth (+2.3%) after two straight months of declines. After four months of steady gains, chemicals sales declined 4.5%. Computer and electronic product sales dropped 5.4%. Canada’s manufacturing capacity utilization fell to 75.1% in December compared to 77.6% in November on lower production. Unfilled orders inched up 0.3% in December. Lower machinery orders were partially offset by order improvements in the fabricated metal product, and computer and electronic industries.
  • Outbreaks of COVID-19 in Canadian meatpacking plants disrupted food supplies. Two of the affected plants in Alberta account for 85% of Canada’s beef slaughter capacity. To prevent further outbreaks, meatpacking plants have issued PPE to workers, staggered shifts and break times, and installed barriers between workstations. However, industry watchers wonder if meatpackers can remain profitable with such measures in place. Canada’s meat industry will likely increase automation as a longer-term solution.
  • Canada’s food industry relies on about 50,000 migrant workers. If workers become ill or their movements are restricted, food processers’ supplies could run short and prices may rise. Migrant agricultural workers have been one of Canada’s hardest hit groups. The pandemic’s effect on migrant workers has led some advocates and industry insiders to call for reforms, including paths to permanent residency status. In July Canada’s government moved to boost protections for temporary foreign workers including C$6 million in direct support through migrant worker support organizations, more than C$16 million to improve employer inspections, and C$35 million to improve living quarters, and provide additional sanitizing stations and PPE.
  • In early January 2021, Canada put new travel restrictions in place requiring visitors entering Canada to have had a negative COVID-19 test within 72 hours of having boarded their flight. Migrant worker advocates argue the requirement puts an undue burden on migrant agricultural and food workers who may not be able to afford high testing costs in their home countries, according to the CBC. In late January, Canada announced further restrictions that will require travelers to also take a polymerase chain reaction (PCR) test upon arrival in Canada, then quarantine at their own expense in a government-approved hotel for up to three days pending test results. Canada’s federal government later waived the hotel quarantine requirement for temporary foreign agricultural workers. The waiver allows migrant workers who test negative upon landing to proceed to quarantine facilities provided by their employers. All travel between Canadian airline services to Mexico and the Caribbean, where many of Canada’s migrant workers originate, has been suspended through April 30, 2021. Additionally, all of Canada’s inbound foreign air travel is restricted to four airports in Vancouver, Toronto, Calgary, and Montreal. The restrictions have left some agricultural and fish processing operations wondering how they will get workers.
  • The Canada Markit manufacturing PMI index fell to 54.4 in January from 57.9 in December. While Canada’s manufacturing was still in expansion territory in January, the pace of growth was the slowest since July 2020. Coronavirus restrictions slowed growth in manufacturing output, employment, and new orders. Purchasing activity grew modestly in January, but border and port congestion lengthened delivery times and increased backlogs. While manufacturing firms were optimistic that output levels would continue to improve, uncertainty about the longer-term impact of COVID-19 weighed on sentiment.
  • Manufacturers that have experienced decreases in year-over-year gross revenue may apply for assistance under the Canadian Emergency Wage Subsidy (CEWS). The funds are to be used for payroll and business expenses. Originally set to expire the first week of June, CEWS has been extended four times and is now set to run through June 2021. In early January, Canada’s government made changes to the CEWS program that set the maximum top-up subsidy rate at 75% for companies with a revenue drop of 70% or more. The CEWS program has lower-tiered top-up subsidy rates for companies’ whose revenue declines have been less severe. As of February 14, 2021, the CEWS program had paid more than C$65 billion to more than 425,000 employers.
  • The manufacturing sector lost 17,700 jobs in Ontario and added 6,500 in Quebec in January. Ontario’s manufacturing employment in January 2020 was up 3.1% compared to year-ago levels; Quebec’s manufacturing employment was down 1.7%. The two provinces represent 73% of the nation’s manufacturing jobs.
  • The automotive industry is one of Canada’s largest manufacturing subsectors. Canada’s auto sales fell 2.6% in January compared to December, and were down 17.4% year-over-year, according to Scotiabank analysis of Wards Automotive and DesRosiers Automotive Consultants data. US sales saw a month-over-month rise of 6.1% in January, but sales were down 3.7% on a year-over-year basis. Much of Canada’s economy was on tight lockdown for most of January, so the drop in auto sales isn’t necessarily indicative of fundamentally weak demand. Despite the stronger restrictions, Canadian consumer confidence in January reached its highest point since the onset of the pandemic, according to the Conference Board.
  • The COVID-19 pandemic has exacerbated an existing labor and skills gap in Canada’s manufacturing sector, according to a Canadian Manufacturers and Exports (CME) survey released in December. About 80% of Canadian manufacturers surveyed reported having a labor and skills shortage. The CME suggest the gaps are likely due to a number of factors including worker health concerns amid the pandemic, disinterest in the sector, childcare obligations, or government economic support for unemployed workers which could be discouraging them to find jobs in manufacturing. More support for women, immigrants, and temporary foreign workers could help close the labor and skills gap, according to the CME. A national childcare program and retraining for people who lost work in other industries could also help.

 

Feb 25, 2021 – Lockdowns Hurt December Retail Results

  • Amid rising infection rates and the emergence of more virulent coronavirus variants, several Canadian provinces reintroduced tighter restrictions in January. Ontario issued a stay-at-home order on January 14, 2021 for the entire province. For much of February, stay-at-home-orders in Ontario’s public health districts were gradually lifted. Toronto’s stay-at-home-order was among the last three to be lifted on February 22. New restrictions were also put in place in January in Alberta (eased February 8), British Columbia (extended indefinitely on February 5), Quebec (eased February 8), and Manitoba (eased February 12). Amid concerns about new, more transmissible coronavirus variants, Canada’s prime minister urged Canadians to avoid travel.
  • Since hitting its low point in April, Canada’s retail sector has added back more than 265,000 jobs. In that time, In January and February, much of Canada was under stay-at-home orders and many non-essential retail businesses were closed. In January, the retail sector shed 210,000 jobs compared to December. The sector was down more than 225,000 in January 2021 compared to the same month a year earlier.
  • Canada’s auto sales fell 2.6% in January compared to December, and were down 17.4% year-over-year, according to Scotiabank analysis of Wards Automotive and DesRosiers Automotive Consultants data. US sales saw a month-over-month rise of 6.1% in January, but sales were down 3.7% on a year-over-year basis. Much of Canada’s economy was on tight lockdown for most of January, so the drop in auto sales isn’t necessarily indicative of fundamentally weak demand. Despite the stronger restrictions, Canadian consumer confidence in January reached its highest point since the onset of the pandemic, according to the Conference Board.
  • Canada’s retail sales decreased 3.4% in December 2020 compared to the prior month, and were up 3.3% compared to December 2019, according to Statistics Canada. Sales were down in nine out of 11 retail subsectors as about 15% of retailers were closed in December due to COVID-19 restrictions. The average length of the retail shutdowns was two business days. Subsectors that saw large declines in December sales included sporting goods, hobby, book and music stores (-22.5%); clothing and clothing accessories stores (-17%); electronics and appliance stores (-12.8%) and furniture and home furnishings store (-7%). The only subsectors that saw growth in December were gasoline stations and health and personal care stores which each saw a rise of 0.3%. On an unadjusted basis, December’s online sales – which don’t include online-only US outlets like Amazon – were up 69.3% year-over-year, and reached an all-time high of $4.7 billion. Canada’s full-year retail sales were down 1.4% in 2020, marking the largest decline since 2009.
  • Canada’s changing approach to pandemic relief may affect some consumers’ buying power. The Canada Emergency Response Benefit (CERB) expired in early October. In August, Canada’s federal government created a C$37 billion plan that increases accessibility to EI and provides three new relief benefits which aim to help workers who do not qualify for the EI expansion. The new benefits are the Canada Recovery Caregiving Benefit (for workers who need to stay at home to provide care to another person), the Canada Recovery Sickness Benefit (helps workers who are ill or must isolate due to COVID-19), and the Canada Recovery Caregiving Benefit (for workers, including self-employed and gig workers, not covered under EI or the two other programs).
  • Retailers that have experienced decreases in year-over-year gross revenue may apply for assistance under the Canadian Emergency Wage Subsidy (CEWS). The funds are to be used for payroll and business expenses. Originally set to expire the first week of June, CEWS has been extended four times and is now set to run through June 2021. In early January, Canada’s government made changes to the CEWS program that set the maximum top-up subsidy rate at 75% for companies with a revenue drop of 70% or more. The CEWS program has lower-tiered top-up subsidy rates for companies’ whose revenue declines have been less severe. As of February 14, 2021, the CEWS program had paid more than C$65 billion to more than 425,000 employers.
  • Large retailers could benefit from the Large Employer Emergency Financing Facility (LEEFF) program. Announced on May 11, LEEFF aims to keep companies that have been hit hard by the epidemic operating and enable them to retain their workers.

Feb 25, 2021 – Sales Decline After Seven-Month Growth Streak

  • Canada’s wholesale sales dropped 1.3% in December compared to the prior month to C$66.5 billion, marking the first monthly decline after seven straight months of sales growth. The December decline in wholesale sales was led by weaker results for the three largest subsectors: motor vehicles and motor vehicle parts and accessories (-4.3%); machinery, equipment, and supplies (-3.1%); and food, beverage, and tobacco (-1.3%), according to Statistics Canada. While December’s wholesale sales were down month-over-month, they rose 4.8% compared to the same time a year earlier. Wholesale sales in December were also up 3% compared to pre-pandemic levels in all 10 provinces, and across five of the seven wholesale subsectors.
  • The wholesale sector’s recovery is not indicative of an economy-wide economic rebound from the impact of the COVID-19 pandemic, according to Statistics Canada. The wholesale sector has likely remained resilient as Canadian consumers made changes to their spending habits. For example, consumers spent more on food but went to restaurants less frequently. Similarly, as entertainment and travel spending dropped, spending on building materials for home renovations increased. However, some wholesalers still face challenges. In a Canadian Survey on Business Conditions in November, about 45% of wholesalers reported they faced fluctuations in consumer demand over the last three months. More than 40% said there was insufficient demand for goods or services during the same period. Just over 30% reported having financial constraints.
  • Wholesalers are expected to adjust their supply chain strategies after the early days and weeks of the pandemic exposed weaknesses. Many industry experts say that the supply chain issues are occurring because product distribution systems in Canada and throughout the world are tuned to supply consumers with just enough of what they need on a given day. Canadian wholesalers experienced challenges in sourcing goods and materials from other nations as well as domestically as manufacturers temporarily stopped production or worker illness shut down suppliers. In a recent survey by HSBC, about 20% of Canadian companies said they planned to diversify their supply chains, both in terms of the number of suppliers and geographically.
  • Between April and December, the wholesale sector added back 62,500 jobs. The sector shed about 2,000 jobs in November, then lost another 7,300 in December. The wholesale sector lost more than 21,000 jobs in January as much of the country was under tight stay-at-home restrictions. Sector employment in January 2021 was 1% above year-earlier levels.
  • Amid rising infection rates and the emergence of more virulent coronavirus variants, several Canadian provinces reintroduced tighter restrictions in January. Ontario issued a stay-at-home order on January 14, 2021 for the entire province. For much of February, stay-at-home-orders in Ontario’s public health districts were gradually lifted. Toronto’s stay-at-home-order was among the last three to be lifted on February 22. New restrictions were also put in place in January in Alberta (eased February 8), British Columbia (extended indefinitely on February 5), Quebec (eased February 8), and Manitoba (eased February 12).
  • Large wholesalers could benefit from the Large Employer Emergency Financing Facility (LEEFF) program. Announced on May 11, LEEFF aims to keep companies that have been hit hard by the epidemic operating and enable them to retain their workers.
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