Business Outlook Survey―Third Quarter of 2021

The recovery in demand is progressing but remains uneven

The number of firms with improved indicators of future sales (e.g., order books, sales inquiries) remains high—a concrete signal of a broad- based strengthening in demand relative to a year ago (Chart 6, red line). The positive outlook is strongest for firms that were hardest hit by the pandemic: those that provide hard-to-distance services (e.g., hospitality, tourism, travel) and the firms that supply inputs to them. These businesses have benefited from the lifting of some restrictions over the summer months, high vaccination rates and the release of pent- up demand. These factors also support their expectations of a faster pace of sales growth over the next 12 months (Chart 6, blue bars). The Delta variant is a source of uncertainty, however, and business, conference and international travel remains well below pre-pandemic levels. Furthermore, results from this third-quarter BOS and the [Canadian Survey of Consumer Expectations][1] indicate that consumers are still cautious about engaging in social activities. Because of this, some of these firms expect a full recovery to take more than a year.

Businesses tied to housing, consumer goods (e.g., food, outdoor activities) and the government sector (especially infrastructure spending)—areas that have led the recovery—continue to have a positive outlook. While most expect sales to continue to increase, firms that experienced record sales during the pandemic anticipate some deceleration.

1. www.bankofcanada.ca/2021/10/canadian-survey-of-consumer-expectations-third-quarter-of-2021/