Canada Added 500k People But No New Businesses

Canadian households may be even less confident about the future of the economy than we think. Statistics Canada (Stat Can) data shows active businesses were unchanged in July. In fact, despite a booming population, the country has seen no growth in the number of businesses that operate. With businesses continuing to close at a faster rate than those opening, the problem may intensify as the global economy weakens. 

Canada Hasn’t Added Any Businesses In 2024   

Canada’s business community continues to show virtually no progress. The country reported 936,904 seasonally adjusted active businesses in July, unchanged from a month before. It was a slight improvement from a drop of 0.2% (-2,000 businesses) in June. It’s a trend that’s become sticky recently. 

“… the number of active businesses has not posted a positive growth rate since January,” notes Stat Can. 

Technically they’re being generous. Seasonally adjusted active businesses have fallen 0.2% (-1,600 businesses) since January, and the current volume is similar to the number operating in November 2023. Not a crisis per se, but it emphasizes the weakness of households when record population growth is met with virtually no new businesses. 

Canadian Business Closure Rate Still Outpaces New Openings

The monthly business opening and closure rate for Canadian businesses.  

Source: Stat Can; Better Dwelling. 

The rate of businesses opening remains lower than the rate of closures. Stat Can reported an opening rate of 4.45% in July, adding roughly 41,700 businesses in the month. In contrast, the closure rate was 4.45% for the month, with 42,300 businesses closing their doors over the same period. It was the third consecutive month the closure rate came in higher than the opening rate, and things don’t improve until those two flip. 

Canada’s business environment isn’t great by itself, but highlights just how weak consumers feel right now. The country managed to add 504k people in the first half of the year, but virtually no growth in active businesses. That a lot of people that required no additional services. Either those population estimates have been significantly inflated or households are poorer than we think.