Number of active businesses in Canada drops

The number of active businesses in Canada dropped by 0.3 per cent (-2,464) in September 2022 as business closures remained higher than business openings, reported Statistics Canada on Tuesday.

“The number of active businesses, which generally increases from month to month, did not post positive growth since May. According to the Canadian Survey on Business Conditions (CSBC), many businesses expected to face obstacles related to rising inflation and costs of inputs, transportation and insurance during the third quarter,” said the federal agency.

“In September, the business opening rate (4.4 per cent) contracted for the second consecutive month to settle below its 2015-to-2019 historical average of 4.7 per cent. On the other hand, the business closure rate (4.9 per cent) increased for the third straight month and was 0.3 percentage points above its historical average. Business closures increased slightly or held relatively steady in all industries.

“In September, the decrease in the business opening rate was due to the 0.1 percentage point decline in both the re-opening (2.7 per cent) and the entry (1.7 per cent) rates. The re-opening rate decreased or held steady for the fifth consecutive month and settled below its historical average for the third straight month. The entry rate has been stable since June 2021, and has stayed within 0.1 percentage points of its historical average of 1.8 per cent.”

Across industries, the increase of the business closure rate in September was not as widespread as the previous two months, explained StatsCan. The closure rate held steady or changed little (+0.1 percentage points) in most industries. The closure rate decreased in information and cultural industries (-0.6 percentage points; -68 closures), arts, entertainment and recreation (-0.4 percentage points; -63), mining, quarrying, and oil and gas extraction (-0.3 percentage points; -22), and educational services (-0.2 percentage points; -17), but not enough to offset increases in other industries.

“The decrease of the business opening rate in September was widespread across industries. The decline was mainly driven by the professional, scientific and technical services industry (-0.5 percentage points; -585 openings). It was followed by construction (-0.2 percentage points; -378), real estate and rental and leasing (-0.6 percentage points; -238) and accommodation and food services (-0.3 percentage points; -236). Data from the CSBC show that these three industries were part of the top five industries with the highest proportion of businesses expecting rising interest rates and debt costs to be a major obstacle in the third quarter. The Bank of Canada has continuously been increasing its policy interest rate since March,” it said.

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)