OTTAWA
,
June 27, 2023
(press release)
–
In March 2023, the number of active businesses dropped by 0.2%, following a 0.3% decrease in February. The decline in the number of active businesses in March was driven by the 0.1 percentage point increase in the business closure rate (4.6%) combined with the 0.1 percentage point contraction in the opening rate (4.3%). The number of active businesses decreased or changed little in all industries in March 2023. Consistent with changes in payroll employment, construction (-0.9% growth rate; -1,087 change in the number of businesses) posted the largest drop in the number of active businesses relative to February. It was followed by transportation and warehousing (-1.8%; -915) and accommodation and food services (-0.9%; -585). The latter posted the largest decline in payroll employment in the services-producing sector in March. In March 2023, the business closure rate edged up 0.1 percentage points to reach its 2015-to-2019 historical average of 4.6%. The increase in the business closure rate was widespread across industries and led by construction (+0.4 percentage point change in the closure rate; +409 change in business closures) and other services (except public administration) (+0.3 percentage points; +210). The other industries that recorded over 100 more closures compared with February were retail trade (+0.2 percentage points; +152), accommodation and food services (+0.2 percentage points; +133) and finance and insurance, and management of companies and enterprises (+0.5 percentage points; +131). The change in the number of business closures in March 2023 was somewhat consistent with business insolvency filings. Indeed, following an 8.2% decrease in February 2023, business insolvency filings rose by 43.1%, or 131, driven by construction (+30 filings), accommodation and food services (+29), retail trade (+17) and other services (except public administration) (+13). In March 2023, the business opening rate dropped for the third consecutive month and settled 0.4 percentage points below its historical average of 4.7%. This decline was due to the slight contraction in both the reopening (2.7%) and the entry (1.6%) rates, which settled 0.2 percentage points below their respective historical averages. The business opening rate decreased or remained relatively unchanged in all industries in March 2023. Construction (-0.4 percentage point change in the opening rate; -584 change in business openings) and accommodation and food services (-0.8 percentage points; -496) drove the decline, followed by retail trade (-0.3 percentage points; -312), transportation and warehousing (-0.4 percentage points; -287) and professional, scientific and technical services (-0.2 percentage points; -181). The series on temporary business closures and exits (or "permanent closures") is now updated to include data up to September 2022. The exit rate edged down 0.1 percentage points to 1.8% in September 2022, slightly above its historical average of 1.7%. The exit rates held steady or changed little in all industries. In March 2023, transportation and warehousing (2.2% exit rate compared with 1.5% historical average) continued to be the industry whose exit rate increased the most compared with its historical average, followed by real estate and rental and leasing (2.2% compared with 1.9%). In all other industries—except forestry, fishing and hunting (1.3% exit rate compared with 1.6% historical average) and finance and insurance, and management of companies and enterprises (1.8% compared with 2.1%)—exit rates were within 0.2 percentage points of their historical averages. Chart 1: Monthly business openings and closures as a percentage of active businesses, business sector, January 2021 to March 2023, seasonally adjusted data Chart 2: Percentage point change in the business opening and closure rates from February to March 2023, by industry, seasonally adjusted data Chart 3: Monthly exits as a percentage of active businesses, by industry, Canada, September 2022, seasonally adjusted data Note to readers 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 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.
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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