Uncertainty in the jobs market will likely make the situation worse in the coming months, reports say
Although COVID-19 has slowed down the rate of insolvency filings nationwide, the year-to-date total is still the highest in a decade, according to the Office of the Superintendent of Bankruptcy Canada.
Overall insolvencies in March stood at 11,198 filings, which was 9.1% lower compared to the same time last year. Consumers accounted for 10,947 of these (down 8.5%), while businesses had 251 insolvencies (down 30.7%) during that month.
Meanwhile, insolvencies from January to March amounted to 141,757 filings, having increased 8.4% annually. Real estate information hub Better Dwelling reported that this was the highest March YTD reading since 2010.
Consumers had 138,166 of these filings (up 8.7%), and businesses had 3,591 insolvencies (down 0.9%) during this time frame.
Having wreaked unprecedented damage to the Canadian economy and financial system, the coronavirus pandemic might further harm the already-struggling national jobs market, according to a recent report.
The study by the federal government’s Parliamentary Budget Officer (PBO) said that the unemployment rate was already at 7.2% by the end of the first quarter. This is expected to only worsen in the coming months, with projections of 14.8% in Q2, 15% in Q3, 12.7% in Q4, and 12.4% by year-end.
“We do have a highly indebted Canadian consumer that we’ve been talking about for quite some time, and just under half of Canadians live paycheque to paycheque,” said Laura Dottori-Attanasio, head of domestic banking at Canadian Imperial Bank of Commerce. “I think it’s been really tough on people, not just financially but mentally – there’s just so much stress in the system. … That stress will continue to build until we get a little more clarity about what happens next and when it happens.”