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Outlook of rural businesses amid the COVID-19 pandemic, second quarter 2021

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Released: 2021-07-09

With COVID-19 vaccination rates rising and restrictions on businesses and the public easing, businesses still faced many uncertainties during the second quarter of 2021.

This analysis of the Canadian Survey on Business Conditions, second quarter of 2021, examines the challenges rural businesses face because of the pandemic and their plans to adapt.

The rising cost of inputs remains a top concern for rural businesses

Over 40% of rural businesses cited the rising cost of inputs as a challenge they expect to face over the next three months, maintaining its hold as the most common obstacle from the first quarter of 2021. The next three most common short-term obstacles for rural businesses were the cost of insurance, government regulations and recruiting skilled employees.

Additionally, rural businesses (18.5%) were more than twice as likely as urban businesses (8.1%) to expect their Internet connection speed to be an obstacle.

Chart 1  Chart 1: Top four obstacles for rural businesses over the next three months
Top four obstacles for rural businesses over the next three months

Fewer businesses plan to close shop compared with the previous quarter

There was a decrease in the percentage of rural businesses planning to sell, close or transfer, compared with the first quarter of 2021, from 7.3% to 6.3%. On the other hand, 1 in 7 rural businesses (14.1%) had plans to expand, restructure, invest or acquire other businesses in the next 12 months.

The general decrease across quarters in the percentage of businesses planning to sell, close or transfer was primarily found in four industries: real estate and rental and leasing; arts, entertainment and recreation; accommodation and food services; and other services (except public administration).

The industries with the highest shares of rural businesses planning to sell, close or transfer were arts, entertainment and recreation (17.0%) and professional, scientific and technical services (15.8%).

Opposing this rural trend were the transportation and warehousing, and professional, scientific and technical services industries, where the percentage of businesses with plans to sell, close or transfer increased by over 10 percentage points.

Chart 2  Chart 2: Percentage of businesses that are planning to sell, close or transfer their business within the next 12 months, by industry
Percentage of businesses that are planning to sell, close or transfer their business within the next 12 months, by industry

Rural businesses consider layoffs and training to adapt to the pandemic

Despite optimism for reduced restrictions beginning in the summer of 2021, some businesses would have to consider laying off staff within the next 12 months. Rural businesses (16.0%) were less likely than urban businesses (21.7%) to report they could not continue to operate at their current level of revenue and expenditures for 12 months or more without considering laying off staff.

Over the next 12 months, 16.0% of rural businesses had plans to retrain existing employees in new skills, with this figure ranging from 33.2% of rural manufacturing businesses, to 3.6% of rural real estate, rental and leasing businesses.

  Note to readers

This analysis focuses on businesses in rural areas, using second quarter 2021 results from the Canadian Survey on Business Conditions. The 2016 Census Subdivision Boundary File was used to identify all businesses' census subdivisions (CSD) based on location. Businesses located in CSDs classified as either census metropolitan areas or census agglomerations were classified as urban. All businesses in other locations were classified as rural.

This survey was conducted by Statistics Canada from April 1 to May 6, 2021, to develop an understanding of the current practices of businesses and of their expectations moving forward, together with how the ongoing pandemic has been affecting businesses. When respondents were asked questions pertaining to their expectations over the next three months, that three-month period could range from April 1 to August 6, 2021, depending on when the business responded. Similar date ranges apply to questions pertaining to expectations over the next 12 months.

Products

The full article "Outlook of rural businesses and impacts related to COVID-19, second quarter of 2021" is now available as part of the series StatCan COVID-19: Data to Insights for a Better Canada (Catalogue number45280001).

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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