Global / Coronavirus Insights
Coronavirus Update: Industry Fast Facts

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by IBISWorld
Apr 06 2020

IBISWorld presents a collection of fast facts that outline how the spread of COVID-19 (coronavirus) is impacting sectors across the countries where IBISWorld operates, including Australia, Canada, Germany, New Zealand, the UK and the US.  

Jump to a sector to find out more

Mining

Utilities

Construction

Manufacturing

Wholesale Trade

Retail Trade

Transportation & Warehousing

Information

Finance & Insurance

Education

Professional, Scientific & Technical Services

Real Estate and Rental and Leasing

Healthcare

Accommodation & Food Services

Arts, Entertainment & Recreation



Agriculture, Forestry & Fishing COVID-19 Sector Update

Many Agriculture, Forestry and Fishing industries rely on exports for a substantial share of revenue, especially from China. A slowdown in exports could result in a great shift in revenue.

Australia

  • Rock lobster fishers have already lost significant revenue from the halt in trade to China. Likewise, grape and citrus fruit growers are heavy exporters to China.

  • Domestic supply of produce from this sector is now higher, placing downward pressure on prices. Seafood prices have already seen declines. Beef sales in China were also affected, with meat already exported stuck in ports in China. However, reports from early March suggest that these products are now being unloaded. Producers have also seen some relief in this regard from increased household food stockpiling.

  • The livestock industries could come under renewed threat, with concerns that the COVID-19 virus is transmittable to animals such as dogs.

Canada

  • This sector is expected to experience asymmetric setbacks from the coronavirus outbreak, as some industries are more dependent on exports than others. For example, the Fishing & Seafood Aquaculture industry is expected to experience a decline exports to China. According to the Conference Board of Canada, live and fresh lobster exports to China were valued at more than $450.0 million in 2019.

  • Many farmers face potential labour shortages as a result of the coronavirus outbreak. Recently, Justin Trudeau announced the closure of Canada’s borders to foreigners in an attempt to limit the spread. However, during seasonal harvests, operators in this sector rely on temporary labour, some of which comes from outside countries. Ultimately, this could reduce overall yield from this sector, reducing the total food supply in Canada and limiting revenue for operators.

  • Already one of the most highly regulated sectors in Canada, operators in this sector face increased scrutiny regarding food production and distribution. To limit the spread of coronavirus, regulators are expected to increase sanitation requirements, in addition to minimizing transportation of sector products.

  • Concerns about the potential transmission of coronavirus among animals will require further monitoring. Previous outbreaks, such as the swine flu and bird flu, have shown the ability to spread among humans and animals. This would increase the possible spread of the coronavirus and further increase scrutiny and controls on a variety of industry products.

 Germany

  • Pork production has dropped in China due to both coronavirus and African swine fever outbreaks, driving up global producer prices. As one of the most prevalent producers of pork, the German market is directly affected by this.

  • While pork producers benefit from rising producer prices, which are about 35.0% higher now than at this time last year, German consumers are likely to notice a rise in pork prices soon.

  • Due to the closure of many inner-European borders, farmers are lacking Eastern European harvest helpers for asparagus harvesting and spring sowing of other vegetables. This could lead to a shortage of domestic fruit and vegetable supply.

New Zealand

  • New Zealand kiwifruit and berry producers in this division have significant export links with China. Japan and South Korea are also key export destinations for these fruits. There does not appear to be any immediate impact to these growers, with the first exports of New Zealand kiwifruit leaving port for Japan in the middle of March.

  • Sheep and beef cattle farmers were benefiting from the higher demand and higher lamb prices as a result of African Swine Fever outbreak in China. However, demand has now reduced significantly placing pressure on these farmers.

  • The resultant increase in domestic supply will further hurt farmers, with prices of products such as lamb already declining in the domestic market. Higher beef prices are likely to be maintained during the 2021 financial year with production expected to decline.

  • Demand is likely to increase in the long-term for fresh produce and dairy, due to the high-quality reputation of the products in China.

United Kingdom

  • Farming leaders and unions have expressed concerns regarding labour shortages amid the COVID-19 crisis, with the Country Land and Business Association (CLA) estimating a shortage of 80,000 workers as the industry approaches peak season. According to Concordia, a charity which recruits international volunteers and work placements, plans to charter planes to bring agricultural workers to the United Kingdom from Eastern Europe are currently being discussed by both the National Farmers’ Union and the Association of Labour Providers.

  • The Crop Farming industry is expected to be negatively affected by reducing prices of global crops. Soya, rapeseed and wheat have already been negatively affected.

  • The outbreak has caused a severe demand shock for British fishers, as a result of plunging demand from export markets and domestic restaurants.

United States

  • This sector is expected to experience modest setbacks from COVID-19 because of its relatively low dependence on exports, accounting for approximately 16.0% of total sector revenue. However, this should be contextualized by recalling that the Agriculture Sector is the only sector of the economy the United States which has a trade surplus with China, the nation’s largest trading partner, so impacts as a result of a pullback in international trade with China could more adversely affect this sector than others.

  • As exports to China are reduced it is likely that US producers will need to cut back on supply which will cause domestic prices to rise, potentially limiting demand for Agricultural Sector products, eroding consumer surplus and ultimately causing sector revenue to decline.

  • Domestically, this economic sector is not expected to be severely impacted by the virus outbreak. Despite potential concerns for workforce reductions, a large portion of sector labor is seasonal and hired on a rolling basis. Therefore, it is not expected that the Agriculture Sector will exhibit labor shortages, which could compound potential price increases as a result of a pullback in domestic agricultural production.


Mining COVID-19 Sector Update

Supply disruptions in China associated with quarantine efforts are expected to ripple through the global economy, disrupting manufacturing worldwide. This is expected to be compounded by an associated decline in demand as consumer sentiment degrades.

Australia

  • The impact of COVID-19 on the Australian Mining sector is expected to be significant and direct. The curtailment of manufacturing activity in China has led to a slump in commodity prices, particularly for crude oil, copper, iron ore, and other industrial commodities.

  • COVID-19 could disrupt the demand for steel through hindering manufacturing activity. The supply of steel could also be disrupted by a potential closure of Chinese smelters due to quarantine needs. Both factors could significantly reduce the demand for iron ore and black coal, presenting a major threat to Australian miners.

  • Several major Chinese commodity buyers could invoke force majeure clauses in their supply contracts with Australian miners. These clauses absolve the buyer from a legal commitment to purchase goods amid unforeseeable circumstances.

  • This is particularly threatening for Australian natural gas exporters, which may struggle to find alternative buyers amid an oversupply in the global market. Natural gas is trading at its lowest price since March 2016.

  • Precious metals producers are likely to benefit from COVID-19 fears, as risk adverse investors transition into safe haven assets such as gold, silver, and palladium. Australian miners are likely to directly benefit from rising gold prices, which in February 2020 reached the highest level since March 2013 at over $1,600 USD per ounce. However, in March 2020, there was a significant selloff by profit taker investor which decreased the price of gold to a low of approximately $1,470 USD per ounce. Although there has been a significant decline in March 2020, precious metal prices are anticipated to recover as more investors look to lower their portfolio exposure.

  • Supply disruptions in China associated with quarantine efforts are expected to ripple through the global economy, disrupting manufacturing worldwide. This is expected to be compounded by an associated decline in demand as consumer sentiment degrades. As a result, the demand for energy and minerals produced by Australian firms is expected to fall.

  • The Federal Government has announced plans to restrict all nonessential services from March 23. Although these restrictions do not include mining activity, it is expected to disrupt downstream demand for commodities.

Canada

  • Since this sector is highly globalized and dependent on commodity prices, it is expected to be one of the hardest-hit sectors in the Canadian economy. A drop in Chinese consumption of raw materials will bring overall oil and gas prices down. Demand for jet fuel has already declined, and natural gas prices have declined to a record low. This will curtail Canadian production.

  • The Oil and Gas Extraction subsector will likely curb oil drilling to adjust to lower demand levels. The price of Western Canada Select crude is down approximately 17.5% year-to-date.

  • Gold prices are rising in Canada as investors shy away from risky assets in this time of uncertainty. In fact, gold prices in Canada recently reached their highest level since 2013. Further damaging this sector, is the proximity of workers to each other during operations. Most health organizations have advised social distancing protocol, which dictates at least six feet of separation between individuals. Mine operators have widely begun the shuttering or closure of mines, as they are unable to ensure the safety of workers while the spread continues. Some operators have recently increased investment in autonomous mining technologies to replace workers, something that had already been in development, though less urgently.  

Germany

  • As demand for fuel has dropped due to the declining travel activity and shrinking production volume, oil prices have dropped, thus furthering the ongoing decrease in oil drilling. 

  • The impact of COVID-19 on the domestic opencast lignite mining operations has only been minor so far, but mining companies have introduced contingency plans at their production sites. Since brown coal is used primarily for domestic electricity generation, lignite mining is a key part of the critical infrastructures in Germany. Only a small fraction of the German brown coal production is exported to other countries.  

  • Gravel extraction and natural stone quarrying are sensitive to changes in downstream demand and may need to restrict operations in the future if domestic construction activities are slowing down.  

New Zealand

  • The Mining sector in New Zealand is likely to be significantly affected by COVID-19, as quarantine measures in Asian economies lead to reduced manufacturing activity, and lower demand for industrial commodities. Furthermore, COVID-19 has begun to spread quickly across Europe and the United States. As a result, manufacturing activity in those regions are expected to decline constraining international demand for commodities.

  • Iron Ore Mining is expected to be significantly disrupted, as virtually all New Zealand iron ore exports are shipped to Chinese steel refineries. Exports were expected to make up 38.2% of revenue in the Iron Ore Mining industry, prior to the outbreak of COVID-19.

  • Coal exports are also expected to be significantly disrupted. China was expected to account for 17.3% of New Zealand coal exports, prior to the outbreak of COVID-19. Coal exports are expected to account for over half of total industry revenue. In addition, supply chain disruption across the Asian region as a result of quarantine measures is expected to disrupt demand in other markets, further hindering coal exports.

  • The Gold Ore Mining industry is expected to be positively affected by COVID-19, as rising uncertainty drives demand for safe haven assets such as gold and other precious metals. Gold producers in New Zealand are likely to benefit from higher gold prices. However, in March 2020, there was a significant selloff of gold by profit taker investors, which significantly decreased the price of gold. The price of gold is expected to recover as more investors look to reduce their exposure to risk. Many producers may have locked in low prices through hedging contracts, and therefore have limited exposure to a positive movement in gold prices.

  • The New Zealand Government announced restrictions on nonessential business activities from March 25. Although mining activity is considered essential, other downstream industries are expected to be restricted decreasing demand for commodities.

United Kingdom

  • Rising cases and some businesses halting operations are expected to negatively affect the sector. Coronavirus spread has caused the price of oil to fall as demand has decreased. Travel bans and weaker production mean lower demand, in turn lower oil prices and in turn negative effects on the mining sector. Mining workers in the UK may also have to lay off some workers or send workers home in order to limit spread. For example, Anglo American have paused most construction and development activity on its Woodsmith mine.

  • The International Energy Association states that global oil demand is expected to decline in 2020 as the impact of COVID-19 spreads around the world, constricting travel and broader economic activity.

United States

  • The sector is highly globalized and largely dependent on commodity prices. It is therefore expected to be the hardest-hit sector in the US economy.

  • China is a major consumer of raw materials due to its large Manufacturing sector. A drop in Chinese consumption will bring oil and gas prices down overall.

  • Demand for jet fuel has declined due to declining air travel, and light natural gas prices have declined to a record low and will likely curtail US production.

  • The Oil and Gas Extraction subsector will likely curb oil drilling to adjust to lower demand levels. The price of West Texas Intermediate crude is down approximately 25.0% year-to-date.

  • Gold prices are on the rise as investors move to safe assets.

 


Utilities

Utilities COVID-19 Sector Update

According to the International Energy Agency, more than 60.0% of the world's solar panels are made in China. Therefore, decreased production caused by the outbreak has the potential to cause substantial disruption to the solar supply chain.

Australia

  • A decline in thermal coal prices due to reduced demand from China is expected to reduce the electricity service price, contributing to a fall in revenue for electricity generators.

  • China features heavily in the supply chain of companies operating in the Wind and Other Electricity Generation industry, and Solar Electricity Generation industry. Disruptions to these supply chains have the potential to reduce the ability of generators in these industries to carry out planned capacity upgrades, or source parts necessary for maintenance.

  • Large amounts of waste are expected as a result of an increase in usage of personal protective equipment. While this presents an opportunity for operators in the Waste Collection, Treatment and Disposal Subdivision, this waste must be managed appropriately.

  • An increase in the number of Australians contracting COVID-19 will likely result in an increase in regulations surrounding waste management and disposal.

  • The Federal Government has announced plans to restrict all nonessential services from March 23. These measures are likely to delay construction and expansion projects across the division. However, the essential nature of many division services, will ensure division participants continue to operate.

  • Falling electricity demand has caused carbon prices in the EU Emissions Trading Scheme (ETS) to reach 16-month lows, falling to approximately €16.35 per tonne at 18 March. This has reduced the cost of fossil-fuel generation. However, renewables prices are also expected to have declined, owing to the slump in oil prices and lower electricity demand.

 Canada

  • Utilities stocks are up in recent weeks due to investors shifting to safer, less volatile investments.

  • Operators are pressured to stay in business during times of uncertainty, while extensions have been given to residential customers ineligible to pay monthly bills.

  • Close cooperation with the World Health Organization is necessary to confirm any new developments on how the novel coronavirus is spread, with water supply and irrigation systems being the most susceptible.

  • Commodity prices, such as natural gas and crude oil, are expected to drop, hindering business operations and supply chains.

  • With key downstream markets experiencing supply chain disruptions and factory closures, the country’s industrial capacity utilization is expected to drop, a proxy for operators to track demand for services.

Germany

  • As the Utilities sector solely fulfills domestic demand, it is not affected by the COVID-19 pandemic.  

  • Reduced demand for industrial production processes and offices is balanced by increased private demand for electricity due to most white-collar employees working from home amongst other reasons. 

New Zealand

  • The expected drop in demand for crude oil and thermal coal from China is expected to reduce global prices of these two commodities. This is expected to contribute to a decline in the wholesale electricity price, and place downward pressure on revenue for electricity generators.

  • Chinese companies supply a significant amount of materials used in the Geothermal, Wind and Other Electricity Generation industry. A slowdown in international trade between New Zealand and China could reduce the reliability of these supply chains and drive a slowdown in renewable electricity generation.

  • The expected increase in the amount of personal protective equipment used in New Zealand in attempt to slow the spread of the virus is forecast to increase the amount of hazardous waste in the country.

  • This is expected to increase regulations around waste management and disposal of hazardous products.

  • The New Zealand Government have announced restrictions on all nonessential activities from March 25. These restrictions are expected to construction activity, and division expansion projects.

  • However, most industry services are considered essential, and are expected to be minimally impacted as a result of these restrictions.

United Kingdom

  • A substantial drop in oil prices caused by low demand from China is expected to cause a decline in wholesale electricity and gas prices.

  • Analysis by the National Grid Electricity System Operator anticipates a significant increase in electricity demand from the residential sector in the coming weeks and months, as schools remain closed and people are forced to work from home. Electricity demand is expected to resemble weekend consumption patterns, with a sharp fall in demand from commercial and industrial sectors.

  • As a result of low electricity demand from commercial and industrial sectors, utilities are expected to experience reduced load.

United States

  • The Utilities sector relies on domestic demand and is therefore not particularly exposed to supply chain disruption caused by COVID-19. However, utilities stocks are up in recent weeks due to investors shifting to safer or less volatile investments.

 


Construction

Construction COVID-19 Sector Update

Construction is highly labor-intensive, with many construction firms using contract labor. These laborers are generally not compensated for sick leave, and therefore may be less likely to self-quarantine if they have traveled to at-risk areas or are exhibiting symptoms. However, any reduction in the amount of labor available due to quarantine can delay projects. Two hospitals have been constructed in Wuhan since the start of the COVID-19 outbreak. Any similar efforts in other countries would boost demand for the institutional building construction industry. China is a key source of inputs for construction industries, with Wuhan, the epicenter of the outbreak, well-known for producing construction materials, mechanical equipment and solar panels. Therefore, the ongoing virus is expected to have substantial supply chain impacts for operators in construction industries.

Australia

  • Shutdowns of nonessential activity do not apply to construction sites. Consequently, these projects are anticipated to continue operations.

  • China has invested strongly in building hospitals in response to the outbreak. Any effort by the Australian government to construct medical facilities would boost revenue for the Institutional Building Construction industry.

  • Rising steel prices due to declining Chinese production may inhibit construction activity.

  • Declining construction activity in China is negatively affecting demand for minerals. Heavy Industry and Other Non-Building Construction depends heavily on mineral developments, meaning weakening mineral prices can dampen demand.

Canada

  • Upstream supply chain issues may restrict construction material availability, hindering sector operations. For example, the Lighting Fixtures Manufacturing industry is heavily reliant on Chinese imports.

  • The sector would benefit from a coronavirus-related interest rate cut by the Bank of Canada.

  • The Canada Mortgage and Housing Corporation’s First-Time Home Buyer Incentive is expected to be affected by the novel coronavirus, hindering consumer confidence.

  • With employees not working during the pandemic, construction activity is expected to halt.

  • Projects funded under the Investing in Canada Plan are expected to experience prolonged completion.

  • Nonresidential construction activity is reliant on crude oil prices, with the novel coronavirus posing a threat on global prices.

  • Key commercial downstream markets are expected to experience supply chain disruption, hindering demand for industry services.

Germany

  • Commercial building construction, in particular, will see a decrease in construction contracts as companies eventually will need to reduce or delay their investment commitments to cope with the financial fallout of the COVID-19 pandemic. It is likely that residential building construction activity will be negatively affected to some extent as well. 

  • The German construction sector relies heavily on construction workers from abroad. Recently tightened travel restrictions in most European countries as well as potential upstream supply chain issues may force construction companies to close sites. Reduced capacities in public planning offices and contracting authorities can lead to delays in the execution of tendering procedures. 

New Zealand

  • Construction sites are not required to pause operations at alert level 3, which was declared on March 23. Consequently, these firms are anticipated to continue operating with enhanced safety measures.

  • New Zealand exports over 95.0% of its iron ore to China. Consequently, declining construction activity in China is expected to negatively affect heavy industry construction firms that derive demand from mineral developments.

  • Construction is highly labour-intensive, with many construction firms using contract labour. These labourers are generally not compensated for sick leave, and therefore may be less likely to self-quarantine if they have travelled to at-risk areas or are exhibiting symptoms.

  • Rising steel prices due to declining production in China are anticipated to increase purchase costs for construction firms.

  • Two hospitals have been constructed in Wuhan since the start of the COVID-19 outbreak. Any similar efforts in New Zealand would boost demand for the Institutional Building Construction industry.

United Kingdom

  • The launch of the Coronavirus Job Retention Scheme on March 20 ensures that HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

  • According to a study from construction analysts Barbour ABI, £25.5 billion of construction work and contracts are currently on hold across the UK.

  • The UK government has published guidance to public sector clients on how they can support suppliers during the outbreak, including advice to pay all suppliers as quickly as possible to maintain cashflow and protect jobs.

  • Construction equipment producer JCB has stopped production at its UK plants owing to an unprecedented reduction in demand for machines. However, the company has announced that it will begin manufacturing steel housings for a new design of ventilator produced by Dyson.

United States

  • Some construction activity, particularly residential, may be put on hold as economic uncertainty persists. The sector would benefit from a Coronavirus-related interest rate cut by the Federal Reserve.

  • Upstream supply chain issues may restrict construction material availability, hindering sector operations. For example, the Lighting Fixtures Manufacturing industry is heavily reliant on Chinese imports, which account for 65.0% of domestic demand.


Manufacturing

Manufacturing COVID-19 Sector Update

Constrained logistics, travel restrictions and a shortage of labor in China have led to difficulties for most manufacturing subsectors. Globalized supply chains and just-in-time manufacturing mean that industry players have become more vulnerable to any slowdowns in the production process.

Australia

  • Constrained logistics, travel restrictions and a shortage of labour in China have led to difficulties for most manufacturing sectors in Australia.

  • Globalised supply chains and just in time manufacturing mean that industries players have become more vulnerable to any pauses in the production process. 

  • Overall demand for food consumption has drastically changed, as major food service chains in China, such as McDonald’s, Yum China and Haidilao, have temporarily closed stores.

  • Following the loosening of restriction measures in China, some of the food service stores have reopened. Food service stores that have strict plans on curbing the risk of COVID-19 infection can operate. Despite this, consumers are still cautious about consuming food at food service stores. However, this is likely to change as consumers gradually ease back to normal consumption level.

  • The situation of constrained logistics in China is also likely to improve over the next few weeks.

  • Australia's largest meat-processing cooperative, Northern Co-operative Meat Company, has had meat products stuck at Chinese ports waiting for dock workers to return to work. However, this is likely to change as dock workers gradually return to work after the lift of travel restrictions.

  • Cellar door sales in Australia have also been severely impacted, as the number of tourists has declined significantly, partly because of bushfires. Domestic travel restriction imposed by the Federal Government will further impact the cellar door sales. As of March 23, 2020, Tasmania, Northern Territory, Western Australia and South Australia have either closed its state borders or will be closing state borders over the next 24 hours.

  • The Chinese government has put a temporary ban on live seafood import. Seafood processors that export fresh seafood to China are left with excess stock. However, this is likely to lead to a reduction in seafood prices for domestic consumers.

  • The Chinese Government has yet to announce a lift on live seafood import ban.

  • Domestically, food-related manufacturing sectors will be affected by the tighter movement restriction measures.

  • The Federal Government has announced a closure of public venues from March 23, 2020, including pubs, cinemas and casinos. Restaurants and cafes can operate but are restricted to offer takeaway and delivery services. These restrictions will affect out-of-home food consumption. Food product manufacturers that cater for these venues will see a fall in domestic demand in the short-term.

  • Many manufacturing operators either operate manufacturing factories in China or rely on supplies from China. COVID-19 could affect supplies for parts or products that are manufactured in China.

  • For example, pharmaceutical product manufacturing relies heavily on imports. Imports are expected to satisfy 72.3% of domestic demand, highlighting the industry's strong dependence on imported products and the limited manufacturing that occur domestically.

  • The sector could potentially face a shortage in supply if COVID-19 spreads further and travel bans persists.

  • Larger manufacturers could shift supply chains to other manufacturing nations such as Bangladesh, Vietnam and Turkey.

Canada

  • The Manufacturing sector will be adversely affected by disrupted global supply chains and lower Chinese consumption. The most significant economic blow within the sector will most likely be from the Computer and Electronic Product Manufacturing in Canada subsector.

  • Certain pockets of the sector, including Pharmaceutical and Medicine Manufacturing and Soap, Cleaning Compound, and Toilet Preparation Manufacturing, will likely experience heightened demand for industry products.

  • The Motor Vehicle Manufacturing subsector is expected to see some disruption as many major automakers are idling their North American factories until at least the end of March. Motor Vehicle Parts manufacturers are also expected to follow suit.

  • Non-medical equipment and supplies manufacturers are also retooling their facilities to assist in the production of medical equipment and supplies such as ventilators and protective masks.

Germany

  • Sales for automobile markets fell almost 82.0% in China in February compared with 2019 sales. This decline quickly trickled into and Europe and other countries, with EU sales dropping 7.0% compared with February 2019. This led to significant revenue losses for German car manufacturers. 

  • Starting on March 17, German car manufacturers Volkswagen AG, Daimler AG and BMW AG scaled back production. 

  • As demand decreases and the virus spreads, supply industries suffer. As a result, automotive supplier Schaefller AG announced to reduce production on March 20. With progressively declining auto manufacturing, many small and mid-sized suppliers’ existences could be threatened. Many upstream companies have cut hours for employees in order to stay solvent, or are contemplating taking on loans. 

  • China is the largest market export for the German Plastics and Rubber Machinery Manufacturing industry. Decreasing demand from Chinese companies will hinder revenue for manufacturers like KraussMaffel Group GmbH.

  • The Steel industry is negatively affected by coronavirus due to China’s presence as the largest steel manufacturing country. In 2018, China produced 51.3% of worldwide crude steel. Steel prices could decline due to less export activity to China. Additionally, almost one-quarter of all German battery imports are sourced from China. As a consequence of the cut back in production leading automotive manufacturers, steel companies like ArcelorMittal are panning on cutting back their production.  

  • Bottlenecks and production losses could hinder mechanical engineering and chemical-pharmaceutical industries. Demand for these goods is likely to fall significantly in the short-term due to the current sharp decline in industrial production in affected areas.

  • Those benefiting from the outbreak include producers of protective gear such as face masks, which play a small role in the German textile market, and metal works companies that may benefit from automotive companies looking for new domestic suppliers.

  • With worsening business sentiment and the widespread shutdown of production sites in key markets such as the car manufacturing sector, the mechanical engineering industry is likely to experience a sharp decline in revenue. 

  • General textile and clothing manufacturers are experiencing a severe drop in demand, leading some manufacturers, like Trigema, to begin sewing medical protective gear. Part of their allure is the durability and reusability of masks. This effort is expected to somewhat curb revenue losses.

  • Although a vaccine or medication for the novel coronavirus does not yet exist, demand for pharmaceuticals is rising, such as antibiotics to treat associated infections.

  • COVID-19 seems to promise future growth in pharmaceuticals due to intensive research for a vaccine. The global search for a vaccine, however, exacerbates external competition.

 

New Zealand

  • Constrained logistics, travel restrictions and a shortage of labour in China have led to difficulties for most manufacturing sectors in New Zealand

  • Stats NZ said the virus may have cost as much as $300 million in lost exports to China in January 2020.

  • New Zealand’s exports have taken a major hit, with everything from timber to meat and fruit processing facing delays and cancelations.

  • The temporary closures of food service stores have impacted food consumption, including meat, dairy, seafood and wine. However, some food service stores have reopened following the loosening of quarantine measures. Food service stores that provide plans on methods to reducing the risk of COVID-19 infections are now allowed to operate.

  • Despite this, consumers are still cautious of out-of-home food consumption. This trend is likely to change as consumers gradually return to pre-outbreak consumption levels.

  • Supply chain disruption in China have negatively affected New Zealand, where many domestic manufacturing firms rely on parts imported from China. However, as more workers return to work after the loosening of travel restrictions, domestic manufacturing firms will see an improvement on supply chain disruption.

  • Meat processing firms in NZ that are facing problems to unload products are likely to see a change in this situation as workers in China slowly return to work as travel restrictions are gradually being lifted.

  • In NZ, rock lobster caught for sale to China, could potentially be released back into the ocean. This means firms in seafood processing industry will have lesser products to export to China. The Chinese Government has yet to announce a lift on seafood import ban.

  • Australia has announced the closure of pubs, cinemas, nightclubs and casinos starting from March 23. While restaurants and cafes can operate but are only allowed to provide takeaway and delivery services. Food-related manufacturing firms, such as meat processing firms, wine producers and milk and cream processing firms that cater to these Australian sectors will see a decline in demand over the short term.

United Kingdom

  • Industrial powerhouses including Airbus, Dyson, Ford and Rolls-Royce have joined a wartime-style effort to manufacture 30,000 medical ventilators.

  • More than 60 UK manufacturers, including Vauxhall and Airbus, have responded to a request from Boris Johnson to regear factories towards the production of 20,000 ventilators.

  • Every major carmaker in the UK is suspending or cutting production as a result of the disruption caused by the COVID-19 outbreak. This includes Vauxhall owner Peugeot, Nissan, Honda, BMW and Toyota. The Society of Motor Manufacturers and Traders estimates that this will cause an 18% drop in UK car production in 2020, compared with 2019.

  • Carmakers have enacted planned emergency Brexit measures to increase warehousing and storage for parts still arriving from suppliers which were ordered several weeks ago.

  • The food manufacturing sector has experienced a surge in demand, with trading on certain products above Christmas levels.

  • Specialist medical and pharmaceutical firms are expected to benefit from a viral outbreak. Specialised Canvas in Chesterfield has experienced growth in orders following the coronavirus outbreak. It is one of the only manufacturers in the UK of pathogen isolation chambers, used to transport and treat people with severe infection and health problems.

United States

  • Sharp declines in consumer demand will adversely affect the US Manufacturing industry. Manufacturers of durable goods such as automobiles, washing machines and furniture are expected to get hit the worst. Such purchases are a burden on most households and are often made on credit. In turn, some durable goods manufacturers are idling production to curb losses.

  • Manufacturers of nondurable goods are expected to sustain or grow sales in the coming months. In particular, manufacturers of consumer nondiscretionary items such as toilet paper, food and household products are expected to see a spike in sales resulting from panic shopping.

  • The largest economic blow to the Manufacturing sector is from the Computer and Electronic Products Manufacturing subsector, the largest durable good contributor to US Manufacturing GDP, accounting for an estimated 12.4%. Major players Apple and Microsoft have issued warnings of potentially lower-than-expected earnings due to supply chain issues and lower consumer demand in China.

  • The Chemical Manufacturing subsector is the largest overall contributor to US Manufacturing GDP, accounting for an estimated 15.9%. The subsector is expected to be adversely impacted by a global decline in industrial activity caused by coronavirus. However, certain segments of the subsector, including pharmaceuticals and soaps manufacturing, will experience heightened demand for industry products.

  • Other pockets of the Chemical Manufacturing subsector catering to industrial markets are expected to be adversely affected by a reduction in global manufacturing capacity utilization and output. Industry clusters at risk include: Basic Chemical Manufacturing; Resin, Synthetic Rubber & Artificial and Synthetic Fibers and Filaments Manufacturing; and Paint, Coating & Adhesive Manufacturing.

  • The Medical Equipment & Supplies Manufacturing cluster is expected to see a strong surge in demand from medical care providers and consumers. In particular, manufacturers of personal protective equipment are running at full capacity as the US government seeks to allay supply concerns. This industry cluster falls under the Miscellaneous Manufacturing subsector, which accounts for an estimated 4.4% of US Manufacturing GDP. On balance, manufacturers of medical supplies and personal protective equipment will stand out as a major outlier of growth within the broader sector.


Wholesale Trade

Wholesale Trade COVID-19 Sector Update

Wholesalers can be negatively affected by reduced manufacturing activity in COVID-19-affected countries.  For example, textile product and clothing wholesaling companies source a significant proportion of their products from China. Difficulty obtaining goods or needing to source them from countries with higher production costs can dampen demand for wholesalers.

Australia

  • Lower shopping activity as a result of shutdowns of nonessential activity is anticipated to negatively affect demand for consumer goods wholesaling from the retail sector.

  • Wholesalers can be negatively affected by reduced production of goods in affected countries. For example, Textile Product Wholesaling and Clothing Wholesaling firms source a significant proportion of their products from China. Difficulty obtaining goods or needing to source them from countries with higher production costs can dampen demand for wholesalers.

  • Machinery and equipment wholesalers, especially Mining and Industrial Machinery Wholesaling firms, are exposed to demand from mineral developments. Declining construction activity in China has weakened demand for minerals such as iron.

  • Rising demand for nonperishable groceries and essential items is anticipated to boost demand for the Grocery, Liquor and Tobacco Product Wholesaling subdivision in the short-term.

  • Rising need for medical supplies and scientific equipment to study the virus and treat patients is anticipated to boost demand for Medical and Scientific Equipment Wholesaling firms.

  • Foreign metal and mineral buyers represent 51.2% of the Metal and Mineral Wholesaling industry’s market. Declining construction activity in affected areas such as China has negatively affected demand from this market.

Canada

  • The sector will likely experience setbacks mirroring those affecting the Manufacturing sector. Industries that import many of their products from abroad will experience a heightened risk. 

  • Wholesaling subsectors with above-average supplier risk resulting from the coronavirus include: Auto Parts Wholesaling Footwear Wholesaling and Chemical Wholesaling.

  • Certain pockets of the sector, including wholesaling of pharmaceutical and medicine supplies and wholesaling of soap, cleaning compound, and toilet preparation, and wholesaling of food products, will likely experience heightened demand for industry products.

  • As many Canadian and global manufacturers temporary close their plants, many wholesalers have followed suit as demand slows. This is expected to lead to many employees being laid off or furloughed.

Germany

  • Wholesale traders with large supply stocks are likely going to profit from the COVID-19-induced import delays. However, these benefits are likely to remain mitigated, as consumer sentiment, and thus consumer spending, is low and retail stores selling nonessential goods have shut down.

New Zealand

  • Wholesalers that source their products from affected areas are exposed to reduced availability. Difficulty sourcing products or higher prices negatively affects demand for wholesalers. For example, many operators in the Clothing and Footwear Wholesaling industry in New Zealand source products from China.

  • New Zealand exports over 90.0% of its iron ore to China. Weakening mineral markets as a result of reduced construction activity in China negatively affect mining activity in New Zealand, and therefore negatively affect demand for Industrial and Mining Machinery Wholesaling.

  • Declining demand for mineral exports to China due to reduced construction activity negatively affects Metal and Mineral Wholesaling firms. Foreign metal and mineral buyers account for 20.7% of this industry’s market.

  • Rising demand for nonperishable groceries due to consumer stockpiling boosts demand for Soft Drink and Pre-Packaged Food Wholesaling industry firms.

United Kingdom

  • Due to the reliance of wholesale on the Manufacturing sector, wholesale trade is expected to suffer similarly to the way manufacturing is suffering.

  • Wholesalers of some consumer goods would experience decrease in demand due to the shutdown of non-essential stores. However, wholesalers that supply food and goods, such as soap, toilet paper and cleaning products, to supermarkets and shops that are still open would see and increase in demand.

  • Jaguar Land Rover (the UK’s biggest carmaker) has had supply chain troubles as it is running out of parts due to the pandemic.

  • Jaguar Land Rover hit by 85.0% sales slump in China in February as the coronavirus kept buyers indoors and most dealerships shut. The significant spread of the virus in South Korea, Japan and Italy would also impact sales in those markets.

  • China is the main producer in most of the critical minerals (31 out of 44) on the European Commission’s 2017 list. Due to the halt in mining in China because of the coronavirus, chemicals wholesaling could face a disruption.

United States

  • The Wholesale Trade industry is expected to experience setbacks mirroring those within the Manufacturing sector. The sector is anticipated to experience increased supplier risk while contending with tempered downstream demand for most downstream buyers. However, suppliers for businesses deemed essential are anticipated to benefit.

  • Subsectors with above-average supplier risk resulting from coronavirus include Metal and Mineral (except Petroleum) Merchant Wholesalers, Professional and Commercial Equipment and Supplies Merchant Wholesalers, Chemical and Allied Products Merchant Wholesalers and Automobile Wholesalers. Meanwhile, grocery, medical supplies, laboratory supply and other essential supply wholesalers are expected to contend with surging downstream demand. Along with many other sector operators, major players, General Motors Company and Ford Motor company have shut down North America manufacturing and warehousing facilities, further contributing to sector setbacks.

  • Nevertheless, demand from essential businesses in foodservice and medical fields are expected to support the sector. For example, Sysco Corporation, accounting for 0.6% of sector revenue, has continued to distribute foodservice products to grocery stores and restaurants. Additionally, the sector’s three largest companies, McKesson Corporation, AmerisourceBergen Corporation and Cardinal Health Inc. have benefitted from the surge in demand for medical supplies. However, these companies are contending with limited supply, which is making it difficult to meet demand. Some large manufacturers, such as General Motors Company and Ford Motor Company, are retrofitting their plants in order to manufacture hand sanitizer and ventilators in an effort to keep up with the healthcare demand.


Retail Trade

Retail Trade COVID-19 Sector Update

Food and beverages and health and personal care retail industries are expected to see a slight bump in sales as consumers stock up on personal protective equipment and, to a lesser extent, emergency food rations.

Australia

  • Fuel prices are projected to decline moderately in response to decreased demand for oil from Chinese manufacturing industries, reducing industry revenue but having little effect on profit. Over 55.0% of refined petroleum sold in Australia is imported.

  • Chinese, United States of America and Germany products make up over 50.0% of the value of imported motor vehicle parts. The temporary closure of many Chinese manufacturers due to outbreak of COVID-19 is expected to disrupt Motor Vehicle Parts Retailing supply chain in the short-term. Additionally, many United States and European motor vehicle and motor vehicle parts manufacturers have temporarily shut down production. Disrupted supply lines could potentially raise the price of after-market components.

  • A significant proportion of electronics products retailed in Australia are imported from China. Therefore, supply is likely to be affected among industries such as Computer and Software Retailing, Domestic Appliance Retailing and Electrical and Lighting Stores.

  • Food retailing industries are likely to be affected by COVID-19, but report a minimal overall change in revenue. Weaker demand from China is expected to encourage meat and produce exporters (at the manufacturing level, such as the Meat Processing industry) to divert stock into the domestic market. Although some products may be in short supply, such as pasta given the COVID-19 outbreak in Italy, Australia produces much more food than it consumes, with no ongoing shortages anticipated at the retail level. Short-term demand may be boosted by Australians stockpiling canned goods in expectation of a major pandemic. Overall, a modest decline in prices is likely, unless retailers do not pass on decreased costs to consumers.

  • Australian retailed footwear is dominated by Chinese imports. Disrupted supply may constrain revenue through a decline in sales volumes.

  • The Federal Government has announced plans to restrict all nonessential services and activities from March 23, 2020. This will affect most retail trade, as nonessential retail stores will have to close due to these new restrictions. Although some stores will still have online retail channels, many smaller nonessential retail stores are expected to be affected by these restrictions.

  • As a result, employee numbers and wage costs are expected to decrease, as nonessential retail businesses, such as clothing retail, layoff staff as stores are unable to open during this prolonged period. Additionally, these restrictions on nonessential retailing businesses are expected to make smaller players exit as they become less profitable.

  • The Federal Government also announced on March 22, 2020, the second stage of its stimulus package for Australia. The Government is providing up to $100,000 to small and medium sized businesses, and not-for-profits that employ people, with a minimum yearly wage of $20,000. This is expected to support some of the smaller retailer, especially businesses affected by the nonessential activity restrictions.

  • Furthermore, the stimulus package has a Small and Medium Enterprises (SME) Guarantee Scheme, whereby the government will guarantee 50% of new loans issued by lenders to SMEs. As well as supporting small businesses with existing loans. This is expected to ease some of the short-term constraints for retailers, allowing smaller industry players access to additional credit.

  • Australian banks are also supporting small businesses by offering small business’s loan repayment deferrals of up to six months. This is expected to lessen the blow for smaller retailers affected by the expected decline in consumer confidence and restrictions on nonessential business activity.

Canada

  • The Hobby, Toy & Game Stores industry among other retail industries including clothing stores and furniture stores are expected to experience significant supply chain disruption since suppliers are heavily dependent on Chinese imports.

  • Prime Minister Justin Trudeau has announced a spending package, which includes a wage subsidy for small businesses and the ability to defer tax payments until August, to help Canadian residents and businesses through the outbreak.

  • Grocery stores and big box retailers are to stay open and are expected to see increases in sales as consumer stock up. Furthermore, Walmart Canada announced a plan to hire 10,000 workers to keep stores open during the pandemic. It also implemented a system in which the first hour of opening is reserved for senior citizens and people with disabilities. Many grocery stores have implemented the same policy.

  • Many retailers have laid off employees as they close their doors and wait out the pandemic. Some larger retailers have agreed to pay their staffs for their scheduled shifts up until certain dates even after temporarily closing.

Germany

  • As of March 18, nonessential retail stores have been closed down in all of Germany. As retailers are dependent on everyday sales, many will be in danger of having to leave the market after only a few weeks. To keep those retailers solvent, the German federal government is issuing loans totaling €25.0 billion and offering delays in tax payments for affected companies until 2021.

  • To secure the supply to the public and shoulder the increase in demand, many supermarkets have extended their opening hours, increased the frequency of deliveries and hiring efforts.

  • Supermarkets and drugstores are currently experiencing a significant increase in sales due to hoarding of household items and durable foods. However, this increase is likely to be offset in the course of the rest of the year.

  • As of March 18, nonessential retail stores have been closed down in all of Germany. As retailers are dependent on everyday sales, many are in danger of having to leave the market after only a few weeks. To keep those retailers solvent, the German federal government is issuing emergency reliefs totaling €5,025.0 billion for small companies and offering delays in tax payments for affected companies until 2021. Additionally, loans are offered to bigger companies. Nevertheless, nonessential retail stores are already expecting tremendous revenue losses for 2020.

New Zealand

  • Softer demand for premium food products from China, as economic activity slows, is expected to affect New Zealand’s food supply chain. Supermarkets and grocery stores may report an uptick in supply, as exports decrease among food-focused industries, such as Meat Processing. Overall, an increase in food supply available for domestic consumption is likely to place downward pressure on prices. However, increased stockpiling of nonperishable goods by consumers is expected to offset the decline in prices. As a result, revenue growth in the Supermarkets, Grocery Stores and Convenience Stores is expected to be moderated.

  • Retail petrol prices are projected to decline as a result of the COVID-19 outbreak. A decline in demand for oil from China, particularly from its manufacturing sector, is expected to place strong downward pressure on oil prices, with a slight lag in flow-through to retail prices.

  • A significant proportion of New Zealand-retailed electronics products are produced in China. Disrupted supply lines and a decrease in manufacturing output may result in shortages of some products. Retailed price rises are expected to be modest. Competitors are likely to boost production in cases of supply shortfalls from Chinese firms, which would represent an opportunity to gain market share.

  • New Zealand’s Wine Production industry is export orientated. However, the currently projected effect on the wine supply chain is light, as key export nations are only lightly affected by COVID-19. However, growing concerns of COVID-19 outbreaks in Australia, the United States or the United Kingdom could result in a decline in wine exports. The Liquor Retailing industry is likely to report a slight decline in prices based on current circumstances, but could see available supply rise significantly should the COVID-19 outbreak fail to be contained.

  • The New Zealand Government has announced on March 25 all nonessential businesses must close for up to 48 hours as the government moves to level 4 of its containment measures. Although only being 48 hours, the restrictions are expected to carry over for a prolonged period as New Zealand aims to contain the virus. This is expected to disrupt many industries in this division that are considered nonessential. Retailers with online sales channels are expected to be less affected by these new restrictions.

  • As a result, employee numbers and wage costs are expected to decrease, as retail business, such as clothing retail, layoff staff due to operating constraints and mounting operating costs from being closed. Smaller industry players are expected to exit due to lack of consumer confidence and these expected increased restrictions in place by the government.

  • The New Zealand Government has also announced a stimulus package which is expected to support the Retail Trade division. In particular, the package will offer $5.1 billion in wage subsidies for affected businesses.

  • Some New Zealand Banks, such as ANZ, have begun supporting these smaller industry players by allowing impacted businesses six-month payment deferrals. This is expected to alleviate some of the pressures on business costs for smaller industry players.

United Kingdom

  • On March 17, The Chancellor, Rishi Sunak, set out a series of temporary measures to support struggling businesses, including £350 billion rescue package to help businesses which need access to cash, as well as a package of tax cuts and grants such as a 12-month business rates holiday and funding of up to £25,000 for property with a ratable value between £15,000 and £51,000 for those in the retail sector.

  • Defra announced amendments to the Competition Act 1998, allowing supermarkets to work together to ensure consistent supply of food and other essential goods. The move allows supermarkets to share data on inventory levels, cooperate on opening times, share distribution depots and delivery vans. It also allows retailers to pool staff to help meet demand.

  • Nonessential UK high street retailers started to temporarily close their doors for the foreseeable future, adding further pressure to struggling retail environment. This includes the likes of the UK’s largest clothing retailer, Primark, as well as several department stores including John Lewis. Meanwhile, supermarkets and independent food stores have extended opening hours, implement priority hours for the vulnerable, as well as imposed quantity limits on essential items.

  • Since 23 March 2020, non-essential UK high street retailers closed their doors for the foreseeable future, adding further pressure to struggling retail environment.

  • Data from the Confederation of British Industry (CBI) indicates a surge in food and drinks as households stockpiled ahead of quarantine measures, while spending on non-essential items slumped. The CBI grocery sales index rose from 29 in February to 94 by 24 March 2020. Meanwhile, clothing and furniture shops reported a score of -75. A score of 100 indicates all of those surveyed reported rising sales and - 100 indicates all businesses surveyed reporting deteriorating sales.

  • According to data from recruitment website, Indeed, supermarkets ramped up recruitment efforts for additional warehouse workers and drivers to cope with the surge in online demand.

 

United States

  • Food and beverage stores and health and personal care stores are expected to see strong increases in sales as consumers stock up on personal protective equipment and food due to state lockdowns and restrictions. 

  • The retail clothing industry is expected to experience massive job losses and drops in sales. As a result, some of the largest industry operators are asking for federal aid in order to stay afloat during the course of the pandemic.


Transportation and Warehousing

Transportation & Warehousing COVID-19 Sector Update

Australia

  • Operators in the Transport, Postal and Warehouse division generate significant revenue from transporting products to and from Australia’s exports markets.

  • As China is Australia’s largest trading partner, a slowdown in international trade between these two nations, has the potential to significantly reduce demand for logistics services, and contribute to a decline in revenue for operators involved in freight transport. 

  • China is Australia's largest  trading partner, with trade between the two countries worth almost $200.0 billion in 2017-18.

  • The Federal Government has announced restrictions on all nonessential activities from March 23rd. Logistics and freight transport services are considered essential, and are expected to face minimal disruption as a result of these restrictions. Operators who provide freight services to downstream customers affected by these restrictions (e.g. retailers) are expected to face a downturn in demand.

  • COVID-19 is expected to have a weakening effect on international and domestic demand for air passenger transport. Approximately 1.4 million Chinese tourists visit Australia each year. Demand for international airlines has contracted significantly, with Qantas and Virgin substantially reducing their scheduled flights. 

Canada

  • Air transportation is being significantly impacted, with massive layoffs as travel is restricted. Air Canada is going to suspend a majority of its international and US flights by the end of March. Furthermore, the frequency of existing air routes is also being slashed.

  • The Scenic and Sightseeing Transportation subsector will likely see a slump in revenue due to fewer international tourists, especially Chinese tourists.

  • Public transportation is experiencing much lower than normal passenger volumes. This is due to more people working from home as well as people travelling to social events and other destinations. Public transportation agencies will most likely need government assistance to continue operating.

  • While more consumers may take advantage of online shopping due to social distancing, consumer spending will almost certainly decline. Thus, freight volumes are expected to decrease, which will lower revenues for industries that support the Transportation sector.

Germany

  • Deutsche Bahn AG, which holds 84.0% of the Intercity Passenger Rail transport market, announced its plan to compensate passengers if their trip is canceled due to the virus. Lufthansa, which has 85.0% market share in the Passenger Air Transport industry, has canceled flights to China until the end of April 2020.

  • Despite decreased international travel, domestic travel within Germany is expected to remain steady.

  • Due to cancellation of passenger air transport, cargo airlines face severe capacity shortages leading to higher prices for air freight. Lufthansa plans to use its passenger aircrafts to increase its capacity and meet rising demand. This puts logistical pressure onto forwarding companies. Plus, lead times are expected to lengthen. 

  • LOT Polish Airlines’ acquisition of Condor, Germany’s second largest airline company, is endangered. 

  • TUI, the world’s largest tour operator, received a €1.8 billion loan from state-owned KfW bank.

  • The four ocean cruise lines in Germany have ceased their operations until the end of April 2020.

New Zealand

  • China is New Zealand’s largest trading partner. Trade between the two countries is worth an estimated $30.0 billion per year.

  • Operators in the Transport, Postal and Warehousing division generate a significant proportion of their revenue transporting products to and from export markets.

  • A substantial decline in international trade with China will have a severe impact on revenue for companies operating in this sector.

  • The New Zealand Government has announced restrictions on all nonessential activity from March 25th. Logistics and freight transport services are considered essential, and are expected to face minimal disruption. However, demand for freight and logistics services is expected to contract due to the forecast decline in downstream demand.

  • Demand for international travel has declined as a result of the outbreak of COVID-19, with the Government instigating a travel ban on foreign nationals entering New Zealand. All arrivals to New Zealand will be required to self-isolate for a period of 14 days.

  • Demand for air transport, as well as other forms of passenger transport, are expected to decline, due to fears regarding the speed at which the virus will spread in enclosed spaces.

United Kingdom

  • Effective starting March 17 for an initial period of 30 days, The Foreign & Commonwealth Office (FCO) now advises British people against all nonessential international travel. This has caused a significant decline in demand for airlines.

  • Peter Norris, chairman of Virgin Atlantic Airways, has warned that UK airlines are in need of between £5.0 billion and £7.5 billion of immediate financial aid. The International Air Transport Association (IATA) has also called for urgent government assistance, warning that global airlines could lose $252 billion (£215 billion) in revenue in 2020.

  • Chancellor Rishi Sunak has reiterated to airlines the measures to support jobs and industry across all sectors, making it clear that he does not share the aviation industry’s view that it is a special case at present. A group of 38 MPs has responded to this by writing to the Chancellor, urging him to take steps to support airlines during the crisis.

  • EasyJet, the UK’s largest airline by passenger numbers, has grounded its entire fleet of aircraft for at least two months. The firms also want to reduce £4.5 billion in spending, including payments for new planes from Airbus.

  • Reduced capacity has caused a jump in air freight prices. The price for sending goods from Shanghai to Heathrow, has increased by 58.3% in the month since the COVID-19 outbreak hit Europe.

  • With less than 5.0% of passengers expected at airlines due to the outbreak, plans are being drawn up by the government to buy-into major UK airlines including British Airways, easyJet and Virgin Atlantic.

  • A global trade slowdown is expected to have a significant impact on UK ports and other freight companies, with the length of time that it takes container ships to transport goods across the world meaning that the effects on inbound capacity are likely to be delayed and more prolonged.

  • The Department for Transport has noted a 70.0% drop in rail passenger numbers, while ticket sales have also dropped by two-thirds. In response to this, the government has suspended all rail franchise agreements, with all fares paid to the government, who will in turn take on the financial risk of running the network. The government has also promised commuters a refund on rail season tickets if they choose to stay at home during the outbreak.

United States

  • The Transportation and Warehousing sector is expected to see a decline in demand from both commercial and consumer markets.

  • Commercial transportation and warehousing industries typically mimic broader economic performance in the United States. As COVID-19 reduces manufacturing outputs and consumer confidence alike, demand from most commercial sectors will be reduced.

  • Air transportation, the second-largest subsector, is currently experiencing strong declines in passenger demand for air travel as a result of the COVID-19 outbreak. This subsector accounted for 16.3% of total sector revenue in 2019. This share is expected to decline significantly in 2020 as flights and travel plans, both domestically and abroad, are being canceled or postponed.

  • Truck transportation, which is by far the largest employer in the sector, will experience reduced demand for services as US and global supply chains are disrupted. As well as being impacted by reduced demand from shippers, excessive oil price volatility occurring at the same time is also likely to impact revenue and operating conditions. Truck transportation accounted for 28.1% of sector revenue in 2019.

  • Trucking industries are particularly fragmented and smaller operators, often single nonemployers, demonstrate thin profit margins. The average age of truck drivers in the United States is over 55, which may emphasize the impact of the virus as a greater portion of drivers pause or reduce their services.

  • The Scenic and Sightseeing Transportation subsector will likely see a slump in revenue due to fewer international and domestic tourists. Declines in consumer demand for industry services may well continue through 2020 and beyond, as health concerns persist. Consumers account for more than 25.0% of sector revenue, so continued declines in demand will be highly consequential for revenue and profitability.


Information

Information COVID-19 Sector Update

While the publishing, broadcasting and telecommunications subsectors are likely to experience moderate revenue increases due to demand for coronavirus news, public places such as movie theaters or libraries are expected to experience the opposite effect due to widespread fear of the virus spreading.

Australia

  • The Federal Government has announced restrictions on all nonessential services from March 23. These restrictions require the closure of venues such as cinemas and libraries, and are expected to lead to a contraction in revenue for these operators.

  • Internet Publishers and Broadcasters, such as Subscription Video-on-Demand services, may see increased demand due to fears of spread of COVID-19, and the increasing number of Australian’s self-isolating at home.

  • Information media and communications businesses, with the exception of cinemas, libraries and other businesses with significant customer facing roles are anticipated to largely operate as normal, as most roles in the sector allow for potential remote working.

  • Software publishers which develop software that enhances the ability to coordinate and work remotely, such as Atlassian, are anticipated to see increased demand over the next few months, as businesses are likely to increase their remote working capabilities.

Canada

  • Similarly to the United States, Canada’s Information sector is not expected to be significantly affected by the coronavirus pandemic, chiefly due to the sector’s enduring reliance on domestic demand, low probability of supply chain disruption and its importance in disseminating data to companies and individuals alike, often in times of crisis).

  • Canada’s motion picture and sound recording subsector, however, is expected to experience a decrease in revenue in at least the short run due to many film and television shoots pausing their production activities in the wake of the virus. For instance, the City of Toronto reported that, of 16 films and TV series shooting in the city the week of March 9, at least six had undertaken the decision to suspend production as a preventative public health measure. According to the same source, production investments in film, TV and other digital media contributed nearly $2.0 billion to the local economy in 2018 (latest data available).

Germany

  • Over the course of the third week of March, many companies have shifted their operations to remote employment. This has led to an increase in the use of cloud-based software such as Microsoft Teams, Skype for Business and Google’s G Suite. Additional demand for this type of software might come from schools, which have been closed in all of Germany as of March 17. IT companies and consultants are working hard to meet the increase in demand. However, this software has been temporarily offered for free by companies such as Microsoft and Google, which is why an increase in revenue for such services is only expected in the medium-term.

  • Cinemas, libraries and similar public venues have been closed in all of Germany as of March 18 and are not to be re-opened until at least April 19. Depending on the full duration of the shutdown, significant revenue losses are to be expected. Upstream industries such as movie production and dubbing are possibly affected.

  • Media outlets experience a significant increase in demand and have increased hours for their employees to offer information in very short periods of time. Revenue for 2020 is expected to increase drastically.

New Zealand

  • The New Zealand government has announced restrictions on all nonessential activities from March 25. These restrictions will require the closure of cinemas and libraries, reducing revenue for these establishments.

  • Products such as newspapers are also anticipated to decline in demand, as risk-averse consumers are more likely to consume news online to avoid exposure to disease.

  • COVID-19 has substantially affected manufacturing output in China over the past month, disrupting supply chains for wireless telecommunications carriers, particularly for the latest smart phone models.

United Kingdom

  • As of March 16, the UK government will hold daily televised briefings to update the public on how to protect themselves. Public’s interest in knowing what is happening regarding advice and most up-to-date news on the coronavirus are expected to support demand for media outlets services.

  • Alongside Zoom, communication platform, Microsoft Teams has reported massive gains in customer numbers as workers stay at home amid the outbreak of the coronavirus. Business Insider reports that Microsoft added 12.0 million daily active users to its Teams workplace chat and collaboration app between March 11 and March 18, bringing the total to 44.0 million. With the rising number of people working from home, demand for these apps is expected to continue growing, supporting this sector.

  • On 30th March 2020, the UK’s main internet providers agreed to remove data caps on fixed-line broadband during the pandemic. They have also committed to support customers who have trouble paying their bills, as well as to offer “generous” new mobile and landline packages. (Companies that have signed up to these commitments include BT, Virgin Media, Sky, TalkTalk, O2, Vodafone, Three, Hyperoptic, Gigaclear and Kcom.)

United States

  • The publishing, broadcasting and telecommunications subsectors may see a moderate increase in sales given greater demand for coronavirus-related news. These subsectors account for an estimated 65.4% of sector GDP.

  • The rapid increase in remote working and the impact of social distancing requirements due to the COVID-19 pandemic are likely to require increased usage of telecommunication services and data storage services, which is likely to benefit industry operators within telecommunication industries in this sector, such as the Data Processing & Hosting Services industry and the VoIP industry.

  • Conversely, industries that rely on in-person patronage and are unable to make up for this revenue through online sales, such as the Movie Theaters industry, are likely to be hurt by the coronavirus epidemic.

  • Operators that provide telecommunications and data hosting services may face additional strain on the capacity of their infrastructure due to increased usage, particularly those in the Internet Service Providers industry and the Wireless Telecommunication Carriers industry.


Finance and Insurance

Finance & Insurance COVID-19 Sector Update

Australia

  • Global sharemarket indices have fallen significantly and in Australia the ASX 200 has fallen over 30.0% since February. The week ending March 20 alone saw a decline of 13.0%, the largest one week decline since the Global Financial Crisis in 2008. This was in large part attributed to concerns surrounding the spread on COVID-19 and its effect on the global economy.

  • Financial asset investors have shifted a large amount of funds into fixed-income assets and funds and other safe-haven assets like gold, the US dollar and US Treasuries.

  • Travel insurers may face higher claims for policies purchased prior to the last week of January when the COVID-19 outbreak was officially classified as a known event by many insurers. For many policies purchased after that day, medical expense and cancellation expenses related to the outbreak will not be covered, unless it is a cancel-for-any-reason policy.

  • General insurers providing business and commercial insurance providers offer business interruption (BI). However, many standard BI policies may not provide cover for claims related to COVID-19 and businesses could find it difficult to make claims, especially exclusions may include diseases and viruses and claims are often related to property damage or physical loss.

  • Life insurers and reinsurers face the risk of a pandemic and are often more expose to mortality and morbidity risks according to AM Best.

  • Banks have offered mortgage relief for customers who lose their jobs, including reducing interest rates and granting deferrals on repayments of up to three months. These institutions have offered relief for small businesses, announcing deferrals on loans for up to six months.

Canada

  • Security exchanges are profiting on higher trading volumes.

  • Canada’s six largest banks are allowing the deferral of mortgage payments up to six months.

  • A higher probability of interest rate cuts has reduced expectations of revenue growth among banks as the net interest margin tightens and lending activity is expected to decline. The Bank of Canada has cut the overnight rate 50 basis points to 0.75% as of March 13.

  • Loan losses are expected to increase as businesses and individuals are put under more financial duress. This is particularly true for lenders with relatively high levels of their loan portfolio in the oil and gas sector, which saw a steep decline in the price of oil recently.

Germany

  • The negative impact of coronavirus on the Manufacturing sector has sent financial markets into a downward spiral, with the DAX showing its largest loss since 2011, at the height of the European Sovereign Debt Crisis. This will adversely impact the German financial sector that is already struggling due to prolonged low interest rates.

  • The high probability of the interest rates remaining at 0.0% is going to hinder revenue growth for credit institutions. 

  • The spread of coronavirus is likely to decrease consumer sentiment and thus reduce consumer demand for loans, which will adversely impact financial institutions such as credit unions.

  • The high probability of the interest rates remaining at 0.0% is going to hinder revenue growth for credit institutions. 

  • According to a new law, consumer loans and mortgage payments that have been taken out before March 15 can be paused for up to three months. This is to keep up consumption and protect the housing market from an influx of sellers. A consequence of the new law is likely going to be a decline in debt payments during the second quarter of 2020. Revenue of debt collection agencies is expected to drop for the current year.

  • The statutory health insurance funds have agreed to provide unlimited funding for all expenses required to cope with the pandemic 

  • As many companies run into payment bottlenecks, several health insurance companies offer them to apply for a deferral of contributions or payment in installments.

New Zealand

  • Similar to global share markets, the NZX 50 fell significantly in the week ending February 28. Despite a brief uptick at the start of March, the sharemarket has continued to fall. It follows the global correction as the COVID-19 outbreak continues outside of China. Since the outbreak, the share price of New Zealand’s largest carrier has fallen by about 40%.

  • Business interruption insurance provided by General insurers generally applies to physical damage and therefore, will not cover losses suffered by most businesses. Only businesses that have personally tailored their insurance policy for scenarios such as epidemics or pandemics will be covered.

  • Most travel insurers in New Zealand exclude payout for epidemics, pandemics and the likely threat of domestic disease. Refunds for travel insurance may apply once Level 4 government restrictions are placed on the country of destination. However, voluntary cancelations by customers will not result in a refund.

United Kingdom

  • The UK financial regulator, FCA, provided new guidance to the providers and buyers of travel, motor, home and medical policies stating they do not expect a customer’s ability to claim affected by the coronavirus outbreak and insurance firms must clearly communicate any policy exclusions that result from coronavirus.

  • On Monday 30 March 2020, the FTSE 100 index fell 2.2% in early trading to 5,387 points after the COVID-19 situation worsened at home with the death toll reaching over 1000 and oil prices tumbled to an 18-year low. Brent crude oil fell 7.1% to $23.16 per barrel, its lowest level since 2002.

  • On Saturday 28 March 2020, credit rating agency, Fitch, downgraded the UK’s rating from AA to AA-, citing significant weakening of the UK's public finances caused by the impact of the Covid-19 outbreak, fiscal loosening stance and continued uncertainty over the UK’s withdrawal and future relationship with the EU. Following this, the value of the pound fell against the dollar as the US domination remained the favourite safe haven for investors.

  • Firms have postponed plans of going public as elevated volatility makes deals difficult to price.

United States

  • Security exchanges are benefiting from higher trading volumes, despite the closing of physical exchanges and all trading being conducted electronically.

  • Revenue growth for banks is expected to be hampered by the Federal Reserve lowering the Federal Funds Rate to the 0.00% to 0.25% range.

  • Credit card issuers are expected to experience lower transaction volumes as a result of decreased consumer spending stemming from economic uncertainty and more individuals remaining at home.

  • Due to lower volume of card purchases, payment processors are expected to see decreased demand for their services as a result of the spread of the virus.

  • Extreme market volatility will likely lead to decreased initial public underwriting revenue for investment banks.

  • Open-end mutual fund and exchange-traded fund managers have seen an increase in investment in fixed-income funds, as investors have sought out safe-haven investments.

 


Real Estate and Rental and Leasing

Real Estate and Rental and Leasing COVID-19 Sector Update

Australia

  • Car rental companies are projected to report a substantial demand decline as both inbound international tourism as well as domestic tourism falls.

  • In particular, the travel ban inbound travelers from China is projected to adversely affect the industry, given Chinese tourists represent 15.4% of total visitors to Australia.

  • Property operators and real estate service providers are likely to see a significant hit to revenue. Amidst all the uncertainty, demand for commercial and residential leases are expected to decline. Furthermore, some businesses are expected to close as a result of restrictions on movement and gathering. New businesses will not take up these leases until there is a renewed sense of certainty in the economy.

Canada

  • Real estate brokerage firms are expected to see less transactions as social distancing means less people will open their homes to potential buyers. Buyers may also delay home purchases.

  • Interest rates have been lowered, but lower consumer confidence is expected to offset the benefit of interest rate cuts.

Germany

  • Nonessential retail companies that are currently suffering severe losses in their day-to-day revenue are beginning to ask for breaks in their lease. It is expected that many landlords are going to agree to breaks in payments to be able to help shops survive and thus secure their own future revenue. Thus, severe drops in revenue for rented workspaces are expected for the current year. 

  • The German construction industry federation expects a drop in demand of commercial and private works contracts. Furthermore, coronavirus will also lead to the breakdown of construction teams for several weeks.  

  • Real estate developers and property managers will also be affected by the crisis because property owners will look for savings potentials.  

  • The property boom in Germany will likely come to an end. Nevertheless, some objects remain attractive for investors as security investments.  

  • Nonessential retail companies that are currently suffering severe losses in their day-to-day revenue are beginning to ask for the rent of March and April to be waived. It is expected that many landlords are going to agree in order to breaks in payments to be able to help shops survive and thus secure their own future revenue. Thus, severe drops in revenue for rented workspaces are expected for the current year. 

  • To protect tenants, the Federal Government of Germany granted delays in lease payments without the threat of immediate eviction. Those who make use of the new law are, however, still expected to pay their rent in the course of 2020. Nevertheless, a drop in rent payments in the month of April could put landlords temporarily in the position of not being able to cover their own costs.

  • Private mortgage payments are allowed to be paused for up to three months in the current situation. This is to prevent consumers from possibly having to sell their property due to financial troubles. If consumers are not able to pay their mortgage, supply on the housing market could increase and prices for real estate could drop.

New Zealand

  • The Passenger Car Rental and Hiring industry is projected to report a significant demand decline as international tourism falls.

  • In particular, the decrease in visitors from China is projected to adversely affect the industry, given Chinese tourists represent 10.5% of total visitors to New Zealand. Of additional concern, tourism from China had already declined significantly in calendar year 2019, with visitor arrivals declining by 9.2% over the year.

  • The Real Estate Services and Commercial Property Operators industry are also likely to be substantially impacted. Consumers are unlikely to be buying and selling houses during this time of increasing uncertainty. Furthermore, many retailers and service providers are expected to go out of business as a result of reduced spending, and new tenants are not likely to come on board until there are significant improvements in the economic outlook.

United Kingdom

  • Due to the social distancing measures, people have been put off viewings of properties. Sellers are worried about people coming in to view their homes while buyers are worried about visiting properties where residents may be infected. Also, rising health concerns are likely to lower consumer confidence, constraining demand for new properties.

  • On March 11, BOE slashed interest rates from 0.75% to 0.25% in an emergency response to the economic shock of the coronavirus. This had taken borrowing costs down to the lowest level in history, with consumers more likely to be able to afford or more inclined to borrow to buy a house. This may help increase the demand for properties and renting. Furthermore, on 19th March, BOE cut interest rates further to a record-low 0.1% to mitigate the impact of the coronavirus.

  • Although Rightmove stated that the average price tag on a home reached a new record high of £312,625 in March. However, this report came out before the spike in UK cases so it doesn’t report the real picture at the moment – the report for March which comes out at the start of April will have a more accurate representation of the impact of the coronavirus; however a report by the Buy Association states that UK house prices are unlikely to crash.

  • The UK housing market has been frozen as the government has issued guidance advising buyers and sellers to delay purchases until COVID-19 crisis passes. However, it has also stated that there is no need to pull out of transactions and if a property is vacant, people can continue with the transaction but make sure to follow guidelines with regards to home removals. If a house is occupied then it is encouraged that alternative dates to move are agreed.

  • Property listings websites are reporting a significant fall in interest in moving home. Zoopla said demand in the week to 22 March fell 40% from the week before and it predicted housing transactions would drop by up to 60% over the next three months. Meanwhile, it said a "rapidly increasing" proportion of sales were falling through, as would-be buyers "reassess whether to make a big financial decision in these shifting times". Therefore, real estate agents are facing a significant negative impact from the coronavirus (as the whole housing market suffers).

United States

  • Overall, the method in which realtors and industry operators conduct their business has been disrupted by the outbreak of COVID-19. Due to mandated social distancing and the limitations imposed on gathering size, many showings and open house events have been canceled. If industry operators cannot rent or sell inventory, industry revenue is expected to decelerate and eventually decline.

  • Currently, the Real Estate Sector is considered a seller’s market, whereby high demand and limited supply empowers sellers to set price conditions, effectively relegating consumers to become price takers. However, this is in doubt for the future, as decelerations in demand for real estate and rental housing may cause selling conditions to reverse but the overall effect of the COVID-19 outbreak on home and rental prices is still indeterminate.

    This industry may in fact benefit from monetary policy and stimulus efforts aimed at combating the outbreak of COVID-19 and boosting US economic performance. Due to the Federal Reserve’s dropping of interest rates to near-zero, commercial mortgages and other debt instruments should also begin to accrue less interest, which may entice some well-positioned consumers to enter into a mortgage, enticed by lower rates, but this impact is still indeterminate. Moreover, the rental of equipment may be buoyed as capital expenditures are trimmed by downstream operators and industrial operators opt to rent machinery as needed, instead of outright purchasing equipment.

 


Professional, Scientific and Technical Services

 

Professional, Scientific & Technical Services COVID-19 Sector Update

Scientific research services are expected to increase in demand as the world searches for a vaccine. Both private and public funding is expected increase to support the increased demand for research services. In general, management consulting firms could benefit from a COVID-19 outbreak, as businesses will need advice on how to manage and mitigate associated costs. Globally, supplies of computer systems and parts will be limited due to the shutdown of many manufacturing plants in China. Apple, a key downstream product provider of phones and other computer systems, has stated that due to COVID-19, Chinese factories have had to shut down. This is expected to create a global iPhone supply shortage.

Australia

  • Delays could be expected for Australian accounting and consulting services due to travel restriction put in place by firms. For example, PwC Australia has stopped all business travel to mainland China, Hong Kong, Macau and Iran. In addition, business travel anywhere other than direct flights to New Zealand, USA, UK or Europe must be given internal approval. PwC employees that have travelled through mainland China, Hong Kong, Macau and Iran have been advised to take 14 days work from home before coming back to the office or client office. Other financial services firms have followed similar precautions.

  • The closure of state borders in Australia could lead to further delays for Australian accounting and consulting services. Accounting and consulting services that rely on domestic travels could turn to digital meetings to reduce delays.

  • Management consulting firms could benefit from the COVID-19 outbreak, as businesses will need advice on how to manage and mitigate costs associated to COVID-19. In particular, businesses with strong ties to international trade and China will be demanding consulting services.

  • Scientific research services are expected to increase in demand, as the world searches for a vaccine. Both private and public funding is expected increase to support the increased demand for research services.

  • In January 2020, scientific researchers at Peter Doherty Institute for Infection and Immunity in Melbourne have been able to recreate the virus.

  • In February 2020, researchers at University of Queensland have stated that they are days away from testing a new vaccine for COVID-19 on animals.

  • In March 2020, the Queensland state government has announced a $17.0 million funding to support University of Queensland to develop COVID-19 vaccine.

  • End users and clients of Computer System Design Services division will generally need downstream technology appliances, such as phones and computers, to run the software or hardware provided by the industry. Although many consumers and clients will already have a computer system, the recent shut down of factories is expected to create supply constraints for end consumers. As a result, this could limit demand for software development and app development services as downstream computer product supply is expected to be constrained.

  • Apple, a key downstream product provider of phones and other computer systems, has outlined that due to COVID-19, Chinese factories have had to shut down which is expected to create a global iPhone supply shortage.

Canada

  • Consultants and advisors are expected to experience volatile renewals from key clients during times of uncertainty.

  • Advertising agencies and services are expected to experience a drop in investment as key clients are not operational or have reduced output capabilities.

  • Digital services that promote the ability to collaborate online, organize projects and support business infrastructure are expected to increase as businesses are forced to operate remotely.

New Zealand

  • New Zealand major management consulting and accounting firms have taken precautions in regard to COVID-19. Firms have both travel restriction and 14 days work from home after traveling to affected regions. This could cause delays on financial reporting and auditing of reports. However, businesses affected by COVID-19 could seek advice from management consulting firms to mitigate exposure and costs associated to COVID-19. As a result, boosting demand for management consulting services in New Zealand.

  • Demand for New Zealand scientific research services is expected to increase as the world looks for a vaccine. Funding for research projects relating to COVID-19 are expected to increase in line with growing demand for research services.

  • In February 2020, New Zealand’s Health Research Council launched a rapid research response to COVID-19 threats and preparation if the outbreak reaches New Zealand. The agency is offering $3 million for research addressing the current threats of COVID-19 outbreak.

  • New Zealand is expected to have limited supplies of computer systems and parts due to the shutdown of many manufacturing plants in China. As a result, many end users of IT software and app development services will be unable to access the application or software due to supply constraints of computers and phones.

  • This is expected to slightly decrease demand for industry services as clients using Computer System Design Services wait for Chinese manufacturing facilities to resume.

United Kingdom

  • Many small businesses in this sector – government aid of £330.0 billion worth of loans that was announced on March 17 is expected to benefit firms and prevent many insolvencies.)

  • If the number of insolvencies rises, legal activities is likely to benefit as well. Advertising and market research firms likely to benefit from government spend on coronavirus information and advice, as well as research into the effects of coronavirus on different markets and sectors; however, some firms may have to cut spending on advertising services due to squeezed budgets.

  • Funeral activities will see a surge in demand as the death toll rises in the UK.

  • The major Accounting and Auditing firms have placed travel restrictions on staff. Firms may face difficulties in doing their audits as a result. They, as well as consultants, have to turn to digital meetings with clients.

  • Advertising revenues are falling as businesses cut spending – at the start of March, ITV’s shares fell by 8.5% as companies in the travel sector are pulling ads amid the spread of the coronavirus and ITV is forecasting at least a 10% fall in advertising revenues in April.

United States

  • It is expected that business will move to providing services remotely as much as possible, although many will have to be put on hold. This will affect how businesses operate as well as demand for the services they provide.

  • Overall, advertising spending is anticipated to take a hit, as business pull back on nonessential services and events are canceled. However, some areas might still experience demand. Internet traffic is anticipated to remain strong and with more people at home, television networks and streaming services are expecting more viewers. As a result, advertising spending on these mediums may see more demand.

  • Professionals providing accounting services, legal services and management consulting services may see a spike in demand from businesses and individual clients seeking advice and guidance on how to protect themselves legally and financially as the COVID-19 pandemic forces the world to shift to a new normal and volatility remains high. Overall, however, demand is anticipated to slow on an aggregate level as large projects and services are delayed.


Education

Education COVID-19 Sector Update

Australia

  • Many universities have shifted to delivering lectures online.

  • NAPLAN testing has been cancelled for the current year.

  • Australia has closed borders to nonresidents. Consequently, international students will not be able to enter the country.

  • Victoria has brought forward school holidays to begin on March 24. Schools have been closing on a case-by-case basis.

  • China is a key source of international students and revenue for domestic universities. From the estimated 950,000 international student enrolments in 2019, over one-quarter originated from China. 

  • As Chinese students are a key source of income for many domestic universities, many have made arrangements to allow students to study remotely.

Canada

  • The Education sector is expected to be greatly affected by the coronavirus outbreak, namely in the form of increasing numbers of school closures and an increasing shift to online-only classes as an alternative to physical school attendance.

  • As of the time of this writing, every province in Canada has closed its schools in an attempt to halt the spread of the novel coronavirus. The province of British Columbia, in fact, was the last Canadian province to declare that it was going to shutter its elementary and secondary schools indefinitely due to COVID-19, with officials investigating electronic learning as a viable option in the meantime.

  • The Colleges and Universities industry in Canada, however, may benefit despite its wide-reaching closures should essential medical research among universities as well as university-affiliated institutions continue as medical professionals and public health officials scramble to find treatments for the novel coronavirus while simultaneously attempting to contain its spread.

Germany

  • Childcare services and schools have closed due to the outbreak, but many are offering to care for children whose parents are considered essential workers.  

New Zealand

  • New Zealand’s borders have closed to all nonresidents with the exception of immediate family members of residents. Consequently, international students will not be able to enter the country.

  • Universities including The University of Auckland and Auckland University of Technology have announced that they will suspend teaching due to the outbreak.

  • Tuition fees from Chinese students provide a key source of income for NZ universities, and the ban is likely to have negative impacts on the sector in the short-term and, potentially, in the longer term.

United Kingdom

  • Effective March 20, all nurseries, schools, sixth forms and colleges across the UK closed until further notice, with limited places kept open for children of key workers deemed essential by the government to help fight the rapid spread of the coronavirus, such as NHS staff.

  • Following school closures, all upcoming summer examinations such as A-level and GCSEs, are cancelled. Students in England will be given grades based past attainment, nonexam assessments and mock examinations.

  • The UK government proposed a cap on UK and EU undergraduate admissions for the academic year starting in September amid COVID-19. It will be the first such limit since the university admission cap was lifted in 2015. The imposition of a cap would both restrict student choices, and those currently going through the application process are set to have their choices restricted.

  • Following the closure of universities and lectures being moved online, students have called for the option to opt out of doing their finals or restart their final year. Following this, some universities including Oxford and Cambridge, have replaced summer examinations with online, open book assessments.

United States

  • The coronavirus outbreak is expected to have an asymmetrical effect on the Educational Services sector.

  • Due to its compulsory nature, the Elementary and Secondary Schools subsector is unlikely to experience a significant decline in demand resulted from school closures. However, within this subsector, operators in the Private Schools industry are expected to be hit harder compared with those in the Public Schools industry as they operate on a for-profit basis.

  • The Colleges, Universities, and Professional Schools subsector is anticipated to experience lower demand from international students, especially Chinese and South Korean students. Similarly, within this subsector, operators in the For-Profit Universities industry are at higher risks.

  • Overall, Business Schools and Computer and Management Training subsector, Technical and Trade Schools subsector, Other Schools and Instruction subsector and Educational Support Services subsector are expected to endure a drop in demand as their services are considered discretionary. Therefore, customers will likely postpone their enrollment until the risks associated with coronavirus lower.

 


Healthcare and Social Assistance

Healthcare & Social Assistance COVID-19 Sector Update

Hospitals, general practitioners and aged care residences will likely face medical supply shortages, such as masks, due to reductions in production from Chinese medical equipment and supply manufacturers. For many countries, retired general practitioners are expecting to be called upon to assist in response to the pandemic.

Australia

  • The Australian Federal Government is establishing 100 respiratory clinics to assess people with fever, cough, a sore throat or shortness of breath.

  • Retired GPs are expected to be called upon to assist in responding to a potential pandemic situation

  • Hospitals are preparing to delay elective surgery to respond to any increases in COVID-19 cases.

  • Public hospitals already face significant pressures for beds and outpatient services; the pressure of a COVID-19 pandemic could result in severe bed shortages.

  • Aged care residential facilities may require additional medical supplies and will likely put in place strict quarantine measures to prevent the spread of disease.

  • Heath Services industries are expected to face supply shortages, particularly for basic medical supplies such as surgical masks and hand sanitiser.

  • The Australian Department of Health has added bulk billed MBS Telehealth Services to allow people access to essential health services in their home while in quarantine and/or self-isolation.

Canada

  • The Hospitals and Ambulatory Health Care Services subsectors will experience surges in demand, particularly from the Medical and Diagnostic Laboratories industry group.

  • Dr. Alan Drummond, co-chair of public affairs for the Canadian Association of Emergency Physicians, said that Canadian hospitals have been trying to function at 100% capacity or higher on a day-to-day basis. In Ontario, many hospitals operate at 120% capacity. As a result, revenue increases for CA hospitals may not be as significant as in the US due to capacity already being maxed out.

Germany

  • Hospitals are encouraged to postpone scheduled operations and keep their capacities free for the care of corona patients.  

  • Many hospitals fear liquidity bottlenecks due to the expansion of capacities and simultaneously stagnating revenues due to postponed operations. 

  • Pharmacies and pharmaceutical wholesaling may also benefit from rising demand for pharmaceuticals; however, the production losses of many companies may put their supplies at risk.

  • Health insurers will face increasing costs as new regulations insist they cover the cost of testing risk groups for coronavirus. Since the end of February, health insurance companies have taken over testing for coronavirus on a large scale. The prerequisite for this is the doctor's decision whether a patient should be tested.

  • Laboratories that test samples for coronavirus face rising demand, especially since health insurers are taking over the costs of testing risk groups.

New Zealand

  • The New Zealand Central Government has enacted initial quarantine measurements to prevent the spread of COVID-19, with current capacity to test over 500 patients per day.

  • Retired healthcare workers may be called back into services if case numbers grow; this has already been announced as potential action in Australia.

  • Hospitals, General Practitioners and Aged care residences will likely face medical supply shortages, such as face masks, due to reductions in production from Chinese medical equipment and supply manufacturers.

United Kingdom

  • On March 11, Public Health England developed a highly sensitive test to detect the coronavirus. This test has been rapidly rolled out to regional labs across the country. Approximately 1,500 tests are being processed every day at PHE labs with the great majority of tests being turned around within 24 hours.

  • On March 17, NHS England announced it would be postponing nonurgent operations and providing care in the community for those who are fit to be discharged to free up 30,000 hospital beds.

  • Effective March 19, recently retired doctors and social workers have been asked to rejoin the NHS, helping to alleviate stringent staffing pressures to some extent.

  • Effective March 23, the NHS will enlist the help of private hospitals to treat coronavirus. The agreement will provide approximately 8,000 additional hospital beds across England and 20,000 extra staff. Under the agreement, private hospitals will undertake the work at cost and will not make a profit.

  • On Tuesday 24th March 2020, work started to convert London’s ExCel exhibition and examination centre into a temporary 4000 bed hospital to treat coronavirus patients. NHS chief executive, Sir Simon Steven, confirmed Birmingham's National Exhibition Centre and Manchester's Central Convention Centre are set to be converted into temporary hospitals too. Both field hospitals will offer an additional 500 each. Sites are also expected to be created in Cardiff and Scotland.

    20,000 recently retired NHS doctors and nurses have returned to work to fight the coronavirus. Former airline staff with first-aid training have also been called as volunteers to help in field hospitals.

  • On Tuesday 24 March 2020, the Royal Voluntary Service called for 250,000 NHS volunteers to collect and deliver shopping, medication or ‘other essential supplies’ for people under isolation, as well as transporting medically fit patients, ferrying equipment and medication between NHS services and sites. Volunteers could also assist with telephone support to those at risk of loneliness linked to self-isolation. On Sunday 29 March 2020, the recruitment drive well exceed their target with 750,000 registering and roster closed.

  • On 27th March 2020, the government launched a new drive on coronavirus tests for frontline NHS staff. The government is working with industry, philanthropy and universities to significantly scale up testing. Research institutions are lending testing equipment to 3 new hub laboratories which will be set up for the duration of the crisis. All current coronavirus testing and research will continue, including at existing local NHS and Public Health England test laboratories. The new programme will add significant new capacity.

  • On 28 March 2020, the NHS announced it would be partnering with US-based Microsoft, Google and Palantir and UK based, Faculty AI, to create a dashboard illustrating the spread of the virus and the healthcare system's ability to deal with it. The dashboard will help the NHS understand how the virus is spreading and identify risks to particularly vulnerable groups of people; ensure resources are deployed to emerging hot spots; ensure critical equipment is supplied to hospitals and other facilities in greatest need and divert patients to the facilities best able to care for them based on demand, resources and staffing capacity. The firms are to draw on data from 111 calls and COVID-19 test results.

 

United States 

  • The Hospitals, Outpatient Care Centers and other ambulatory healthcare industries are seeing a surge in demand from patients seeking COVID-19 testing and treatment.

  • Hospitals and other ambulatory care providers are facing a shortage of N95 surgical masks and other protective facemasks. Hospitals are urging people with stockpiles of surgical masks to donate them to local healthcare providers. In a move to increase the supply of masks, new legislation protects 3M, Honeywell and other respirator manufacturers from lawsuits when selling masks to healthcare workers.

  • The Telehealth Services industry is experiencing a significant increase in demand and revenue as people are seeking out telehealth services to avoid going to healthcare facilities and potentially spreading or contracting COVID-19.

  • Medical and diagnostic laboratories are increasing production to increase their COVID-19 testing capacity.

 


Arts, Entertainment & Recreation COVID-19 Sector Update

Australia

  • The shutdown of nonessential activity in Victoria and New South Wales is anticipated to have a strong negative effect on arts and recreation services, as all in-person events will have to be cancelled until restrictions on nonessential activities are lifted.

  • Any potential delays or cancellations could mean lost revenue or significant costs to sports and recreation facilities operators and administrators.

  • Potential for large-scale art, cultural and sporting events to be postponed or cancelled. This has already happened for the AFL, which has moved its annual game in Shanghai back to Melbourne.

  • Examples from overseas include the Chinese Formula One Grand Prix being postponed. The Matildas’ Olympic qualifiers were to be held in Wuhan, but were later moved to Sydney. In Italy, some Serie A and Europa League fixtures are postponed or will be played behind closed doors and empty stadiums. All Japanese J-League games will be postponed until 15 March.

  • Crown Casino has lost its exemption to social distancing measures and will be included in the shutdown of nonessential services. Consequently, revenue for the Casinos industry is anticipated to decline significantly.

Canada

  • Movie theatres across the country have closed indefinitely in an effort to help contain the virus. Many movie release dates have been postponed or the movies have been released on streaming services till a time when movie goers could see it in the theatre.

  • Many art institutions, including concert tours, museums, theatres and symphonies, are closed as restrictions on large public gatherings have been put into place, but are offering online virtual tours and performances to help ease boredom and fear during the pandemic.

  • Many art institutions have postponed or canceled events, and are either closed or are switching to limited services. This has led to temporary layoffs of many of these institutions’ employees.

  • Every sporting event in the country is canceled or delayed with various timelines for each sport.

  • On March 22, 2020, the Canadian Olympic Committee and the Canadian Paralympic Committee announced that the Canadian athletes will not compete at the Tokyo 2020 Games due to the pandemic. The committees requested that the International Olympic Committee postpone the games for a year.

Germany 

  • As museums are forced to close, it is expected that their revenue will plummet in 2020. 

  • Most sports games and professional sports activities in Germany are suspended at least until the beginning of April. German ice hockey has canceled its post-season following the government’s ban on events with more than 1.000 spectators. German sports leagues with the highest revenues are paused until at least April 2, leading to huge financial distress for sports clubs as they need the income from ticket sales and sponsoring to finance players and other employee salaries. 

  • On March 16, the German government decided to stop sports activities at and in all public and private sports facilities. This will lead to major revenue slumps for sports facilities and sports clubs. 

  • Artists and venues are suffering significant losses due to the government-mandated ban of any public or private events. To soften the impact on freelancers and artists, the German government put credit programs into place. Credit of up to €250,000 per case can be given to these groups without further inquiry. 

New Zealand

  • Under alert level 3, which came into effect on 23 March 2020, public gatherings and venues are to be closed. This is anticipated to have a strong negative effect on Arts and Recreation Services, as no events will be able to take place until the alert level is reassessed.

  • SKYCITY Casinos’ international business division is expected to be affected by COVID-19 related travel restrictions, with some planned visits from key clients postponed or cancelled. However around 90% of the group’s EBITDA is derived from local business. However, local business is also included in the alert level 3 restrictions.

United Kingdom

  • Boris Johnson has ordered all pubs, restaurants and gyms across the UK to close to combat the spread of coronavirus and prevent the NHS from being overwhelmed.

  • Following this announcement, a stream of local authorities, such as London’s Hammersmith and Fulham Borough, and the National Trust, the heritage and environment organisation, have announced they will close local parks and gardens following a wave of new visitors during the social distancing period.

  • The Coronavirus Bill 2020 granted the government powers to restrict movements and gatherings. Numerous momentous events such as the London Marathon, RHS Chelsea Flower Show and Glastonbury Festival have been either cancelled or postponed. Alongside retail and hospitality, Arts, Entertainment and Recreation industries are likely to bear the brunt of the social distancing period.

  • All non-essential stores and shops such as pubs, restaurants and gyms across the UK, remain closed for the foreseeable future.

  • Demand for online streamlining and video platforms has increased sharply as household turn to services such as Netflix and newly released, Disney+ to keep entertained during lockdown. At the same time, demand for online fitness videos and classes has boomed as gyms remain closed as consumers seek to remain fit at home.

  • New forms of entertainment have arisen with the video-chatting app, Houseparty, reaching number one on Apple’s top download list. Meanwhile, households are also seeing a revival of traditional boardgames and puzzles.

United States

  • Operators in the Arts, Entertainment & Recreation sector are expected to experience a significant drop in demand due to temporary closures required by the government.

  • The Non-Hotel Casinos industry, Ski & Snowboard Resorts industry and Amusement Parks industry are susceptible to revenue declines as they garner a notable share of revenue from international customers.

 


Accommodation and Food Services

Accommodation & Food Services COVID-19 Sector Update

Australia

  • Reduced international tourism activity from China and other markets is likely to negatively impact players in the accommodation and Food Services Division, particularly as Australia has a travel ban on arrivals from mainland China.

  • China is Australia’s largest market in terms of visitor arrivals, accounting for approximately 15.0% of total visitors.

  • Chinese tourists also stay longer and spend more when in Australia than visitors from other markets, with Chinese tourism expenditure in Australia totaling close to $10.0 billion in 2018-19.

  • From March 20, only Australian citizens, residents and their immediate family members are authorised to travel to Australia. Additionally, all arrivals to Australia are required to self-isolate for a period of 14 days. Additionally, Western Australia, South Australia, Tasmania and the Northern Territory are requiring all interstate visitors to self-quarantine for a period of 14 days.

  • The Federal Government has announced restrictions on all nonessential services from March 23. These restrictions are expected to result in a sharp drop in demand from overseas and domestic tourists.

  • The restrictions placed on nonessential activities apply to restaurants, cafes, bars and clubs. These operators will not be allowed to trade, except for to offer takeaway services.

  • Division revenue is expected to contract sharply as a result of government regulations.

Canada

  • Many food service operators are struggling to stay afloat due to significant drops in revenue and are pleading with provincial governments for assistance to prevent bankruptcies. While many food service operators have switched to take out, the drop in revenue for many makes it not financially feasible to keep their doors open. Therefore, many food services locations have shut down indefinitely due to the virus. This has led to many layoffs or furloughs of employees. Operators that are staying open for takeout are still forced to lay off parts of their staffs and reduce hours of those remaining. Some operators are considering closing down permanently if the outbreak lasts more than a couple months.

  • Prime Minister Justin Trudeau has announced a spending package, which includes a wage subsidy for small businesses and the ability to defer tax payments until August, to help Canadians and businesses through the outbreak.

  • The Hotels & Motels industry in Canada and other tourism related industries have experienced losses already as Chinese tourists account for a significant portion of tourism receipts. According to the Conference Board of Canada, Chinese tourism spending is expected to be cut by one-third this year. Largest dollar-value impact will be felt by British Columbia and largest proportional impact will occur in Prince Edward Island. Chinese tourists account for 10.0% of total international visitor arrivals in 2019, more than double the US percentage.

  • Prime Minister Justin Trudeau announced on March 16 that Canada will close its borders to noncitizens, with the exception to United States citizens, due to the coronavirus. Furthermore, in hopes to slow the spread, social distancing and staying home has been encouraged. This has led to domestic trips also decreasing rapidly as the spread has reduced many potential customers’ desires or abilities to travel. Consequently, many tourism attractions such as national parks and ski mountains, along with theatres and restaurants, are closed indefinitely. Therefore, many people are either cancelling or postponing their trips, therefore demand for accommodation has plummeted. Accordingly, many hotels and motel operators have either laid off or furloughed majority of their staff as they have very little revenue coming in.

  • Many campgrounds and ski mountains have closed indefinitely to help contain the spread of the virus. Other campgrounds and ski mountains have remained opened but are limiting use of the facilities.

Germany

  • In 2018, Chinese tourist spent a total of 3.0 billion nights in German hotels and other accommodations, according to the Federal Office of Statistics, spending about €410.00 per night. This is expected to decrease in 2020 and have a significant impact on the accommodation sector.

  • As a result of canceled trade fairs, business and private trips and the worldwide travel restrictions, hotels have already been recording substantial revenue losses since the beginning of March. Despite promised financial support, short-time work and the suspension of the obligation to file for insolvency, hotel closures are likely to be unavoidable in the coming months. 

  • Restaurants and cafés are closed; only delivery and takeaway are available in some restaurants. 

New Zealand

  • From March 22, only New Zealand citizens, permanent residents and their immediate family members are authorised to enter the country. All arrivals must self-isolate for a period of 14 days.

  • New Zealand’s travel ban for tourists is expected to negatively affect the Accommodation and Food Services Division.

  • International leisure travellers account for over 30% of the Hotels and Resorts industry’s revenue, the reduction in international visitors is likely to significantly reduce revenue for many establishments.

  • The New Zealand Government has announced the restriction of all nonessential activity from March 25. Consequently, operators providing nonessential services such as hotel resorts, restaurants, cafes, bars and clubs will be required to close until further notice. Food and beverage retailers will be allowed to open to provide takeaway services.

  • These restrictions are expected to lead to a sharp drop in revenue for many operators across the division.

United Kingdom

  • Cafes, pubs and restaurants ordered to close as of March 20 by Boris Johnson. However, takeaway food can still be ordered. McDonald’s has decided to close all 1,270 of its restaurants by the end of March, while Nando’s, Itsu, Costa Coffee and Subway also plan to do the same. This is in order to protect the wellbeing of staff and customers during the coronavirus outbreak.

  • As food services have to close down, many businesses may struggle to pay workers’ wages. In order for businesses not to lay off staff the government had decided to step in. The government announced it will pay the wages of employees unable to work due to the coronavirus pandemic, in a radical move aimed at protecting people's jobs. It will pay 80.0% of salary for staff who are kept on by their employer, covering wages of up to £2,500 a month. The wage subsidy will apply to firms where bosses have already had to lay off workers due to the coronavirus, as long as they are brought back into the workforce and instead granted a leave of absence.

  • On March 17, the Chancellor confirmed that he was extending the business rates holiday to all businesses in the hospitality sector and funding grants of up to £25,000 for smaller businesses with a ratable value less than £51,000.

  • At the start of March, trade association UKHospitality reported that British hotels have seen a 15.0% drop in bookings in a week as tourist numbers fall due to coronavirus fears. At the same time, the Guardian reports that some major UK hotel chains are in discussions with the government about turning their properties into temporary hospitals to provide the NHS with emergency bed space or staff accommodation as the coronavirus spreads.

  • The British Takeaway Campaign (BTC), which represents restaurants, takeaways and small businesses in the supply chain, called for an immediate three-month freeze on rent ahead of quarterly payments due next week. Otherwise, many businesses in the sector face insolvency within weeks.

  • It might have been anticipated that restaurant delivery apps would benefit from the lockdown, but it is reported that orders in the UK have fallen sharply over the last week of March. This is due to consumer anxiety over infection, the widespread closure of restaurants and the departure of some large brands, such as McDonald’s and Wagamama, from delivery apps. Central London particularly has recoded significant decline as lunchtime orders to office workers has disappeared.

United States

  • The Accommodation and Food Services sector is at risk for a sustained drop in demand stemming from elimination of most inbound international travel, the cancelation of all large-scale events and the forced closure of many bars and restaurants.

  • The Accommodation subsector is expected to see a decline in demand as the US government has banned all inbound travel to the US from several countries, including China and the European Union.

  • Domestic travel will likely decline as well as more travel restrictions are added, further reducing demand for the Accommodation subsector.

  • The Food Services subsector is expected to be hit substantially, especially in large cities, as many bars and restaurants have been mandated to close by local and state governments.

  • The forced closures have already increased unemployment within the sector as many small businesses cannot afford to pay staff while they are closed.

  • Nonetheless, operators in the Food Services subsector that are able to increase their mobile, delivery and take-out orders may be able to sustain some revenue and employment.

  • The Mobile Food Services industry may see an increase in demand as consumers seek to mitigate their exposure to the virus while supporting business and eating at home.