When Ontario Premier Doug Ford ordered the closure last Friday of restaurants, fitness centres, cinemas and performing arts until at least Nov. 6, he understood the consequences.
Since the beginning of the pandemic, employees in these sectors had already suffered disproportionately. In the national capital region, the first COVID-19 lockdown stripped employment in hotels & restaurants by more than half. With the gradual re-opening of the economy employers started rehiring. But as of September, employment in hospitality-heavy sectors was 25 per cent below where it was in February — compared with a net decline of just five per cent for the rest of the local economy.
Retailers, with the exception of big box stores such as Costco and Walmart, have also been forced to make substantial trims to staff levels. These remain nearly 10 per cent below where they were in February. And that doesn’t begin to cover the economic pain because so many of these employees are working fewer hours.
Restaurants and retailers comprise thousands of small businesses that are the bedrock of Ford’s political base. The premier had vowed earlier in the week not to shut down people’s livelihoods unless he was presented with solid evidence that such a move was necessary.
Such evidence apparently arrived in the form of “alarming public health trends that require immediate attention”, to use Ford’s words.
To some extent this was inevitable: COVID-19 has been spreading rapidly, especially here and in Peel and Toronto. Across the province, the number of confirmed cases over the past week or so has averaged 700 per day — roughly 25 per cent higher than during the peak of the pandemic last April. Over the same period, the tally of active cases in the province climbed seven per cent to 5,540.
Even so, Ontario’s health officials had been somewhat reassured by the fact the number of COVID-19 patients being treated in hospital had actually tumbled 76 per cent to about 200 in early October.
So where’s the alarming trend? Almost certainly, part of it has to do with an accelerating “positivity” rate. While some of the rise in new confirmed cases of COVID-19 is the result of sharply increased testing, the city’s health authorities have been disturbed by the steep climb in the percentage of positive tests.
The ratio during the week ended Oct. 4 was 2.6 per cent. That was well short of the situation last April, when more than 15 per cent of COVID-19 tests were positive — in large part because tests were being allocated for obviously sick people.
Nevertheless, it’s still a marked deterioration from last July, when typically fewer than 0.5 per cent tested positive.
The percentage of positive tests has been rising rapidly in Ottawa since Labour Day — and health officials were keen to avoid another holiday-inspired acceleration.
The other trend being watched carefully by Ottawa Public Health is the rate of infection in the community, otherwise known as R (t) — which measures how many times a single infected individual will forward the pathogen. The last bit of public data from OPH described a seven day average of 0.8 as of Oct. 5. At first glance this suggests a community that is getting control of things, especially compared with the situation immediately after Labour Day, when infected people were passing along the illness to an average of 1.5 people each.
What we don’t know is what happened between Oct. 6 and 11 — transmission data for this period has been suppressed thanks to a larger than normal backlog. This needs to be sorted out before statisticians can properly calculate the new ratio.
Bottom line: the province and OPH alike would like to use the next four weeks to reverse some key trend lines. Which of course leaves many of the region’s small businesses once more in limbo, with many owners hanging on by the thinnest of margins, despite promised financial help from Ontario, Quebec and the federal government. Ontario, for instance has earmarked $300 million to assist businesses affected by the latest shutdowns with fixed costs such as property taxes and energy bills.
The economy for the region as a whole has fared relatively well compared with the country’s other big cities. Indeed, the capital region’s jobless rate in September was 8.6 per cent — making it the only major metropolitan area in single digits. The unemployment rate in the other cities ranged from 10.7 per cent in Montreal to 12.8 per cent in Toronto.
Part of this distinction has to do with our region’s supremely unbalanced economy. Fully 24 per cent of the region’s employment base is in public administration. Of the other big urban centres, only Edmonton, with a 6.2 per cent ratio, relies on government for more than four per cent of its workforce.
Add in a couple of other strong sectors — health services (13.6 per cent of the capital’s employment last month) and education (7.3 per cent) — and it seems likely the capital region’s economy should have sufficient shock absorbers for some time to come.
That’s not much solace for workers in hotels & restaurants (4.6 per cent of employment) and culture & entertainment (3.6 per cent), who must contend with a hugely unequal result from COVID-19.
Nor will it protect Ottawa and Gatineau from the inevitable retracing that will occur down the road, when the federal government must finally address its massive debt.
OTTAWA – The Canadian economy was flat in August as high interest rates continued to weigh on consumers and businesses, while a preliminary estimate suggests it grew at an annualized rate of one per cent in the third quarter.
Statistics Canada’s gross domestic product report Thursday says growth in services-producing industries in August were offset by declines in goods-producing industries.
The manufacturing sector was the largest drag on the economy, followed by utilities, wholesale and trade and transportation and warehousing.
The report noted shutdowns at Canada’s two largest railways contributed to a decline in transportation and warehousing.
A preliminary estimate for September suggests real gross domestic product grew by 0.3 per cent.
Statistics Canada’s estimate for the third quarter is weaker than the Bank of Canada’s projection of 1.5 per cent annualized growth.
The latest economic figures suggest ongoing weakness in the Canadian economy, giving the central bank room to continue cutting interest rates.
But the size of that cut is still uncertain, with lots more data to come on inflation and the economy before the Bank of Canada’s next rate decision on Dec. 11.
“We don’t think this will ring any alarm bells for the (Bank of Canada) but it puts more emphasis on their fears around a weakening economy,” TD economist Marc Ercolao wrote.
The central bank has acknowledged repeatedly the economy is weak and that growth needs to pick back up.
Last week, the Bank of Canada delivered a half-percentage point interest rate cut in response to inflation returning to its two per cent target.
Governor Tiff Macklem wouldn’t say whether the central bank will follow up with another jumbo cut in December and instead said the central bank will take interest rate decisions one a time based on incoming economic data.
The central bank is expecting economic growth to rebound next year as rate cuts filter through the economy.
This report by The Canadian Press was first published Oct. 31, 2024
