Canada saw the highest business closure rate since the first summer of the COVID-19 pandemic in June, with one in 20 businesses closing that month, according to Statistics Canada.
Canada’s economy saw 46,354 businesses close in June, marking the largest wave in exactly 4 years.
It’s the highest closure rate since lockdown, a time when businesses were physically restricted from opening up to do business.
The data comes at a time when the unemployment rate also continues its upward trend and is seen highest among young adults.
In addition to the high rate of closures, the agency reported that the business opening rate also dropped by 0.4 percentage points, bringing it to 4.2%.
This drop marks the largest decline since August 2021.
“That statistics are worrisome,” Andreea Bourgeois, director of economics with the Canadian Federation of Independent Businesses told True North.
Bourgeois noted that while some of the business closures mentioned will be seasonal, therefore they’re not closing permanently, new businesses opening is a sign of a healthy, growing economy.
“You want to see that you have new businesses on the market trending upward and you want the closing rate dropping,” said Bourgeois. “You want to have a strong entrepreneurial presence on the market and the trend we’re seeing now is exactly the opposite.
She said not only is the market trending in the opposite desired direction, but that it’s doing so at an “alarming” rate.
The business closure rate increased 0.2 percentage points for the second consecutive month in June.
“The closure rate was 5.0%, its highest level since June 2020 when it reached 7.1%. In June 2024, the opening rate was 0.5 percentage points below its 2015-to-2019 monthly historical average while the closure rate was 0.4 percentage points above its monthly historical average,” reads the data from Statistics Canada.
“In June 2024, as business openings contracted and business closures increased, the number of active businesses dropped by 1.0% (-9,037 businesses).”
According to Statistics Canada, payroll employment decreased by 0.3% and real gross domestic product remained essentially unchanged that month as the 0.4% decrease in goods-producing sectors was partially offset by the 0.1% increase in services-producing industries.
The agency said that the decline in the business opening rate was predominantly driven by a decrease in the reopening rate, which dropped 0.3 percentage points, bringing it to 2.6%.
“The decrease in business openings in June was widespread across sectors. The overall decline in business openings was led by construction (-759 openings compared with May; a 20.1% contribution to the decrease in business sector openings), followed by health care and social assistance (-517; 13.7%) and accommodation and food services (-452; 12.0%),” reads the report.
Business closures either changed little or increased across all sectors in June, with notable sectors like construction seeing 643 closures and 67 insolvency filings as well as retail trade with 406 closures and filing 42 insolvencies.
Bourgeois said that the data speaks to “people’s interest, appetite and courage to open a business.”
“The outcome of this is that we will have fewer businesses on the market because more are closing and fewer are opening,” she said. “It’s worrisome.”