Survey predicts a slow economic recovery

Niagara-based businesses report loss of revenue, 7% at risk of imminent, permanent closure

It is going to take Niagara some time to recover economically from the pandemic.

That was one of the conclusions from a Region-administered business impact survey that was distributed directly to about 10,000 businesses through chambers of commerce, business associations and social media.

The survey, which was taken in April, found about 40 per cent of the businesses that responded expected it would take two years or longer to recover from the COVID-19 emergency. Of those, 18 per cent said it would take three years or more.

“As the economy opens up, we’re going to see a lot of positive trends in the macroeconomic indicators,” said Blake Landry, the manager of economic research and analysis with the Region’s economic development agency.

“However, that does not reflect the debt burden incurred by businesses during the pandemic.”

A total of 786 Niagara-based businesses responded and reported an average loss of revenue per business of $1.1 million. Further, about 27 per cent of companies reported being vulnerable to closure. Seven per cent said they were at risk of imminent, permanent closure.

“They’re going to need support for the next few years, and that’s very evident in the data,” Landry said. “In terms of businesses plans to reduce footprint within two years, 12 per cent reported they did plan to reduce their footprint. We know that COVID is changing the way businesses look at their footprint and their operational space.”

The survey also showed that some businesses are expecting a prosperous future. Twentyfive per cent responded that they were stable, while 12 per cent said they were doing well.

Some businesses said they would increase their staff from pre-pandemic levels and estimated they would add 674 parttime and full-time positions.

“We are going to see a huge flood of people looking to reenter the labour force, looking to regain employment,” Landry said.

“There’s going to be a huge need to help facilitate that. Businesses have a pretty positive outlook in terms of their hiring needs into the future in terms of businesses that have lost revenue.”

Retail sales dropped by $183.7 million, or 3.1 per cent compared to pre-pandemic levels.

“More than half of the respondents lost more than a quarter of their revenue, and most businesses reported some form of lost revenue,” Landry said. “A substantial number of businesses lost 76 to 100 per cent of their revenue.”

The survey broke down the lost revenue by sector, and, as expected, those hardest hit included accommodation and food services, arts, entertainment and recreation. So were personal service businesses such as hair salons.

“What surprised me, too, was manufacturing and the number of companies who reported lost revenue,” Landry said. “So that was also an important one because we do know manufacturing gained employment during the pandemic, but they did lose revenue.”

The survey also asked business owners for the top five obstacles to recovery. The answers, in order, included a slow return of customers, increased debt loads, understanding COVID-19 guidelines, staff training and hiring.