MNI REALITY CHECK: Rocky Canada Re-Opening on Supply Shortages

Canada's economic restart may not be quick or smooth as firms struggle to hire back workers and face supply shortages that drive up costs, dimming optimism around the accelerating vaccine rollout, industry sources tell MNI.

Gross domestic product likely declined 0.8% in April according to an economist consensus ahead of a report due Wednesday at 830am EST from Statistics Canada. The agency may also give a flash estimate for May that also shows a decline, reflecting major shutdowns in the third wave of the pandemic that disrupted manufacturing and retail sales. There is a fair amount of uncertainty around the April figure with estimates ranging from -0.6% to -1.1%.

Output is expected to pick up in June as provinces such as Ontario and Quebec re-opened and vaccination rates rose well above 50%, but a full economic rebound still needs to be propped up by government support.

Tony Elenis, President & CEO of Ontario Restaurant Hotel & Motel Association:

"Forecasters say it is going to take two years, many will take longer, just to get back to our feet. As the recovery road starts, there are loans to pay as well as existing prices going up for food, and because of the workforce issue the employers have to pay more for hourly wages and that would hurt them," Elenis said.

"There are many signs pointing to a very painful recovery for the sector."

Consumers may also face some sticker shock with hotels boosting their rates as they fill up again, and restaurants pass along higher food costs, he said. Managers must also hire back a workforce slashed by 30% as most activity was halted earlier this year.

"It is time to hire, but many of us find it hard to find an employee," he said. "Part of it is because some of the larger cities' employees find the cost of living too high to stay in the city and they moved to small cities."

"Right now, in Ontario, we need to understand the details around the opening, and what type of capacity is going to open especially for events, as people would book their events from now and they need to know the capacity they can host."

Dave Earle, BC Trucking Association President:

"Getting back to normal is really a supply chain issue, which I don't know how long that's going to take. I don't think people would notice it on store shelves but certainly as we try to make investments it is going to remain difficult for a while," Earle said.

"Contract to contract, there is pressure on rates to move up, and in the longer term we certainly anticipate rates firming and continuing to move up, but they are all over the place right now."

"One of the big problems we have right now is the supply chain constraints because of the semiconductor shortage," he said. Firms are also turning to investments to curb greenhouse gas emissions as carbon taxes are entrenched and "we are more than a decade behind in terms of equipment availability and technology compared to the light vehicle world," he said.

Kevin Boon, General Manager, BC Cattlemen's Association:

"Demand for beef is holding steady but the cost of food has been increased, and I don't think a lot of this increase is because of the pandemic, the big part of this increase is the cost of transportation, carbon tax, and that is passing to the consumer," Boon said. "The biggest challenge is the supply chain disruption."

"We are going to see some of the food prices continue to rise over the next six months", he said. Those higher prices haven't been enough to cover the squeeze from higher production costs, he added.

"We are holding steady but it is not as strong as it was pre-pandemic. It also been hard to find electronic components and machinery so it is a hard process to run everything."