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Are Canadian small businesses headed for an L-shaped recovery?

Governments across Canada have imposed severe restrictions on business activities as part of their plans to fight COVID-19. Many restrictions have since been relaxed, but small businesses have not returned to normal activity. CFIB estimates that if recovery maintains its current pace, it will take small businesses a year and five months to return to normal sales, with the hospitality sector taking more than eight years.

Projected time needed for most businesses to be at normal revenues again, Canada, mid‑September 2020

Hospitality (E.g. restaurants, hotels) 8 years 3 months
Enterprise & Administration Management (E.g. staffing agencies, building management) 5 years 4 months
Professional Services (E.g. law firms, accounting) 2 years 7 months
Finance, Insurance, Real Estate & Leasing 2 years 2 months
Natural Resources 2 years
Construction 1 year 10 months
Personal, Miscellaneous Services (E.g. dry cleaners, mechanics) 1 year 6 months
Retail 1 year 5 months
Average for all sectors 1 year 5 months
Manufacturing 1 year 2 months
Arts, Recreation & Information (E.g. golf courses, gyms) 1 year 1 month
Agriculture >10 months
Wholesale 10 months
Social Services (E.g. dentists, chiropractors) 9 months
Transportation 9 months

If nothing is done in the short term to kick their recovery into higher gear, they are likely headed for the dreaded “L-shaped” recovery, meaning that the steep recession of the last few months would be followed by an extended period of depressed employment, investment, production and sales among Canadian independent businesses, plus of course closures. It also shows how far we are from normal and can help assess what level of support is still needed from governments, consumers and communities so our local economies can get through this economic crisis.

Related Documents

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Sept. 2020 Are Canadian small businesses headed for an L-shaped recovery?

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