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The IHS Markit global purchasing manager indices (PMI) were released today. Across advanced economies, they showed a deep economic contraction. No surprise given the lockdown, and it is not worth going through the details of the dismal numbers. The PMIs are some of the timeliest economic indicators making them important to watch for signs that a recovery has taken hold, which is why they are in the Deloitte Economic Recovery Dashboard. As our economy transitions out of the current downturn, they will become more important to monitor.
The financial impact of the lockdown is now showing up in rent payments. Commercial REITs in Canada are reporting that they only collected between 55 and 70 percent of payments in April. Residential rental payments appear to have experienced a more modest decline. Nevertheless, it is early days. The federal income support and wage subsidies should reduce some of the financial strains for renters, and this should limit the negative impact on rent payments, but the full extent of the fallout from the lockdown will only be known as time passes.
The Prime Minister, Justin Trudeau, today announced more than $1 billion in support of a national medical research strategy to fight COVID-19 that includes vaccine development, the production of treatments, and the tracking of the virus. This new funding builds on the $275 million investment for COVID-19 research and medical countermeasures announced in March.
As reported yesterday, governments are starting to announce how they might gradually reopen the economy.
Saskatchewan Premier Scott Moe announced the "Re-open Saskatchewan Plan" today, outlining five phases for re-opening the province.
Phase 1 - May 4: Restrictions will be lifted on certain medical practices, including dentistry, opticians, and physical therapy. Restrictions will also be lifted on some low-risk outdoor recreation like boating and fishing.
Phase 2 - May 19: Lifting restrictions of retail businesses and personal services closed under the province's state of emergency. Businesses are expected to continue to practice physical distancing and implement screening measures if physical distancing is not possible.
Phase 3 - TBD: Relaxing the restrictions on public gatherings to 15 people and reopening the remaining personal services. Restaurants and food services can operate at 50 percent capacity and gyms, childcare centres and licensed establishments to re-open.
Phase 4 - TBD: Public gathering restrictions increased to 30 people. Re-opening of casinos, bingo halls, curling rinks, swimming pools, municipal parks and playgrounds, movie theatres, museums and similar facilities.
Phase 5 - TBD: Lifting all long-term restrictions, contingent on the progress of virus containment. Long-term restrictions include maintaining the provincial state of emergency, limiting non-essential travel, mandatory 14-day self-isolation following international travel, visitor restrictions to care facilities, suspension of classes in educational institutions, and large public gatherings.
For those looking for international perspectives, a country receiving considerable attention is Germany, as it has been very successful at testing and limiting the impact of the virus. If its health outcomes are favorable as it eases the containment restrictions, it could be a model for other countries.
Statistics Canada has released some crowdsourced data on how Canadians are being psychologically affected by the COVID-19 pandemic and the lockdown. The results are not surprising, but some numbers are worth highlighting. At least 80% of participants in all age groups reported being very or extremely anxious about overloading the health system. Similarly, the vast majority of participants reported that they were worried about vulnerable people's health. Close to 6 in 10 people aged 65 and older reported that they were very or extremely concerned about their own health, compared with roughly 4-in-10 young adults age 15 to 34.
Younger participants in contrast, were more focused on social stressors resulting from the pandemic, such as family stress from confinement, or the possibility of civil unrest. Specifically, participants aged 15 to 24 were more likely to report that they were very or extremely concerned about stress from confinement at home (41%), a concern they also shared with adults aged 35 to 44 (40%) who are more likely to be living with young children. 10% of women and 6% of men reported that they were concerned about the possibility of violence in the home. Close to one-half of participants aged 15 to 24 reported that the COVID-19 pandemic would have a "moderate" or "major" impact on their ability to meet their financial obligations. This compared with an overall rate of 34% for all participants. Taken together, these sentiments point to the importance of continued support and attention to mental health services, social services and family supports as Canada navigates recovery. Indeed, mental health issues from the lockdown may be a key legacy from the crisis.
Craig Alexander is the first Chief Economist at Deloitte Canada. He has over twenty years of experience in the private sector as a senior executive and leading economist in applied economics and forecasting. He performed macroeconomic research, regional and sector analysis, and fiscal market forecasting and modelling. Craig is a passionate public speaker and holds a graduate degree in Economics from the University of Toronto.