Canada’s reputation as an ideal environment may be more hype than reality these days. Statistics Canada (Stat Can) data shows businesses suffered a major setback in June. The country saw the largest wave of business closures since the depths of the 2020 pandemic, when lockdowns physically restricted businesses from activity. In just one month, Canada saw enough businesses shutter to reverse more than a year of progress.
Canadian Businesses Are Closing Like A Pandemic Just Kicked Off
Canadian businesses are shuttering at a breakneck speed. Seasonally adjusted data shows 46,354 businesses closed in June, marking the largest wave in exactly 4 years. That’s right, the current environment is so rough that businesses are responding like 2020 pandemic lockdowns just kicked off.
The closure rate (share as a total) also set a similar pandemic record. The rate climbed 0.2 points to 5.0% in June, meaning 1 in 20 businesses closed their doors for good last month. If that sounds high, that’s because it is—the highest rate since June 2020.
Even more disturbing is the fact this issue is now widespread. Stat Can observed closures across industries, noting it was a broad issue. They did note that construction and retail were slightly ahead of the pack. This highlights how weak households are these days, since both industries should have seen a large boost just by sheer population growth.
Canada Just Saw 1 In 20 Businesses Close In A Single Month
The opening vs closing rate of businesses across Canada. The rate is determined as a share of total active businesses at month end.
Source: Statistics Canada.
Canadian Business Opens Are Falling Sharply As Consumer Demand Weakens
At the same time, fewer Canadians are starting a new business. Monthly business openings fell 8.6% (-3,746) to 39,482 businesses in June. It was the slowest month for new businesses since March 2023, and one would assume the reason for closures is also holding back budding entrepreneurs.
The opening rate, openings as a share of total active businesses, was also much weaker than usual. The rate fell 0.4 points to 4.2% in June, marking the weakest rate since August 2021. Once again, the weakness was observed across all industries, with construction and retail showing a slightly faster erosion.
Canadian Business Closure Wave Saw Over A Year of Gains Wiped Out Over 30 Days
More business closures and fewer openings means a decline in total businesses in Canada. The net balance of openings and closures reduced active businesses by 1% (-9,037) to 929,173 in June. This is the lowest number of active businesses since April 2023, meaning a single month wiped out over a year of gains for the Canadian economy. Ouch.
Canadian businesses are closing at one of the fastest clips in history—a rate not seen since they were locked down by a pandemic, and physically restricted from doing business. That doesn’t bode well with the rising unemployment rate, elevated even higher for young adults. It also seems to conflict with the narrative of a strong economy that’s the envy of other G7 countries.
English (US) · 