Pandemic top economic challenge but the pain is not evenly spread: CPA Canada Business Monitor (Q3 2020)

Toronto, September 21, 2020 – A majority of Canadian business leaders consider the effects of the COVID-19 pandemic the number one challenge hindering the country’s economic growth, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

About half (52 per cent) of respondents cited the pandemic fall out as the top economic challenge; much greater than the next identified factor. However, the findings of the latest CPA Canada Business Monitor (Q3 2020) also revealed that not all businesses are feeling the pain. While the majority of professional accountants in leadership positions surveyed (58 per cent) reported decreased revenues for their organizations since the start of the pandemic, 20 per cent also reported unchanged revenues while 21 per cent reported increased revenues.

Optimism among the survey participants regarding the Canadian economy sits at 17 per cent which is  dwarfed by those expressing a pessimistic viewpoint (46 per cent). A further 36 per cent is taking a “wait-and-see” neutral approach. Respondents are split on how long precautions businesses have put into place to protect customers and employees will have to remain in place, with 31 per cent saying less than 18 months and 55 per cent saying 18 months to three years. Only nine per cent thought the precautions would be needed for more than three years.

Company-specific findings

Despite the current economic uncertainty facing the country because of the pandemic, survey participants are feeling somewhat optimistic about the fortunes for their own organization over the coming 12 months. Almost half (46 per cent) of those surveyed are optimistic about the prospects for their business, which is similar to what was reported in CPA Canada’s last, pre-COVID Business Monitor in Q4 2019. Only 17 per cent report pessimism about their organization’s prospects with a cautious 37 per cent feeling neutral.

In response to the pandemic, 40 per cent of respondents note their organization has temporarily laid off employees and 32 per cent temporarily reduced hours. In contrast, 20 per cent have hired permanent employees, while 26 per cent have laid off employees permanently.

The Canada Emergency Wage Subsidy (CEWS) is proving  popular among the organizations of survey participants  with 55 per cent applying for it and another five per cent planning to do so. Ten per cent of businesses that applied for CEWS support state their business would not have survived without it and a further 82 per cent claim they likely would have survived but the subsidy helped them avoid taking difficult steps such as layoffs.

Despite the current challenges, over the next year, 47 per cent of respondents are predicting their businesses will see increased revenues, 43 per cent are foreseeing increased profits and 28 per cent anticipate an increase in employee numbers.

Federal Throne Speech

Canadian business leaders will be paying close attention to the upcoming Speech from the Throne outlining the government’s agenda for the next session. The majority (60 per cent) of respondents cite a timeline to return the federal budget to balance as something they would like to see in the Throne Speech. Their next “wish list” items were tax cuts to incent business investment (35 per cent), greater support for businesses affected by COVID-19 (25 per cent) and more help for provinces and municipalities (22 per cent).

“This is a critical turning point for Canada’s economy,” says Charles-Antoine St-Jean, president and CEO, CPA Canada. “With the provinces at various stages of reopening and new virus cases on the rise, uncertainty remains extremely high and the results of this quarter’s survey reflect that heightened concern. Canada needs a clear and decisive plan in addressing the ongoing challenges faced by this country, including measures to support reskilling and upskilling, the transition to a low-carbon, digital economy and a long-term plan towards fiscal sustainability.”

Methodology

The CPA Canada Business Monitor is issued quarterly, based on a survey commissioned by CPA Canada and conducted by Nielsen. The report draws upon business insights of professional accountants in leadership positions in privately and publicly held companies.

Note that, due to the disruptive effects of the COVID-19 pandemic, the Q1 and Q2 editions of the CPA Canada Business Monitor were cancelled. For the Q3 2020 study, emailed surveys were completed by 323 of 3,795 people identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). The response rate was 11.6 per cent, with a margin of error associated with this type of study ±5.4 per cent, with a confidence level of 95 per cent. The survey was conducted from September 1 to September 16, 2020. The survey background document is available online at cpacanada.ca/businessmonitorQ32020.