Canada's number of business openings in April increased 0.6 percentage points to 4.9%, while closures rate rose 0.1 percentage points to 4.8%; number of active businesses remained relatively unchanged: Statistics Canada

OTTAWA , July 25, 2023 (press release) –

In April, the business opening rate rose by 0.6 percentage points to 4.9%, following three consecutive months of decreases. The business closure rate edged up 0.1 percentage points to settle at 4.8%. The number of active businesses remained relatively unchanged, as business closures and openings were somewhat similar.

In April, the business opening rate settled above its 2015-to-2019 historical average of 4.7% for the first time since April 2022. The business closure rate rose slightly for the third consecutive month in April 2023 to settle at 0.2 percentage points below its historical average of 4.6%. The business closure rate decreased or remained relatively unchanged in most industries.

The increase in the opening rate in April was mainly driven by the 0.4 percentage-point increase in the re-opening rate to 3.1%, its highest level since July 2021. The entry rate edged up 0.1 percentage points to 1.7% in April 2023. Both the re-opening and the entry rates have been stable since August 2021 and settled within 0.2 percentage points of their respective historical averages.

The business opening rate increased in all sectors in April 2023, led by construction (+0.9 percentage-point change in the opening rate; +1,118 business openings). Construction was also the sector with the highest increase in payroll employment from March to April. Professional, scientific and technical services (+0.7 percentage points; +891) and transportation and warehousing (+1.5 percentage points; +787) were also major contributors to the increase in the business opening rate. They were followed by retail trade (+0.8 percentage points; +696), accommodation and food services (+1.1 percentage points; +679) and health and social assistance (+0.6 percentage points; +655).

The series on temporary business closures and exits (or "permanent closures") is now updated to include data up to October 2022. The exit rate increased from 1.8% in September to 2.0% in October, 0.3 percentage points above its historical average of 1.7%. With the exception of mining, quarrying, and oil and gas extraction (-0.2 percentage-point change in exit rate; 1.9% exit rate), the exit rate increased in all sectors.

Over the fourth quarter of 2022, 39.4% of businesses were expecting rising interest rates and debt costs to be an obstacle, compared with 37.0% of businesses over the third quarter. The Bank of Canada increased its policy interest rate from 0.25% in January 2022 to 3.25% in September, with the highest increases occurring in July (+1.00 percentage point) and September (+0.75 percentage points).

In October, the exit rate settled above its historical average in all sectors except manufacturing (0.9% exit rate; 1.0% historical average), wholesale trade (0.9%; 1.0%) and finance and insurance and management of companies and enterprises (1.9%; 2.1%). Transportation and warehousing (2.6%; 1.5%) continued to be the sector where the exit rate increased the most from its historical average, followed by arts, entertainment and recreation (2.0%; 1.4%).

Chart 1: Monthly business openings and closures as a percentage of active businesses, business sector, January 2021 to April 2023, seasonally adjusted data

Chart 2: Business opening rate and its components, business sector, January 2021 to April 2023, seasonally adjusted data

Chart 3: Monthly exits as a percentage of active businesses, by sector, Canada, October 2022, seasonally adjusted data

Note to readers
For the April 2023 release, historical revisions were made to the underlying data. This change resulted in the revision of the series published in March 2023.

The June 2022 and subsequent geographic locations are based on the 2021 Census of Population geography.

April 2022's release introduced a new process for seasonal adjustment in the presence of the outliers generated by the response to the COVID-19 pandemic. The new process has a greater number of outliers that are explicitly recognized at the outset of the seasonal adjustment process. This leads to a greater number of outliers being taken into account than was previously occurring. Examinations of seasonally adjusted data using the new process show results that are more stable over time and produce smaller revisions.

Every new month of data leads to a revision of the previously released data due to such factors as the seasonal adjustment process and a new version of the Generic Survey Universe File (or vintage of the Business Register). As such, the estimates may vary compared with a previous release.

Openings are defined as businesses with employment in the current month and no employment in the previous month, while closures are defined as businesses that had employment in the previous month but no employment in the current month. Continuing businesses are those that have employees in both months, and the active population in any given month is the number of opening and continuing businesses in that month. Reopening businesses are defined as opening businesses that were also active in a previous month (that is, they closed in a given month and had positive employment in a subsequent month). In contrast, entrants are opening businesses that were not active in a previous month.

The definition of exits is based on the Longitudinal Employment Analysis Program (LEAP) annual exits. Because the LEAP definition can require up to 24 months of data for a business to be counted as an exit, projections of exits using predicted growth rates are implemented using a regression model of exits on closures of more than six months. As a result, there are no published exits in the last six months. A temporary business closure is the difference between closures and exits. For more information on temporary business closures and exits, see "Defining and measuring business exits using monthly data series on business openings and closures."

A business is defined as an enterprise operating in a particular geography and industry.

The vast majority of businesses operate in one industry and one location or geography. These businesses will be counted once at the national and provincial levels in the monthly estimates of openings and closures. For example, a retailer in Windsor, Ontario, will be counted as an active business in the Ontario estimates and once in the national estimates.

Some businesses can have multiple operations, and they can be in different industries and geographies. Such businesses can be counted more than once in the monthly estimates of openings and closures because they are active in multiple industries or geographies. For example, if a retailer has operations in both Alberta and Ontario, it will be counted as an active business in both provinces, but only once at the national level because it represents only one active firm. Similarly, a firm with retail and wholesale operations will be counted in both industries when individual industries are examined. However, when the business sector is examined, the firm counts only once because at that level it represents one firm active in the business sector.

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

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