Business Openings and Closings Dip in January

May 3, 2021

In January, despite extended public health restrictions in many provinces, the number of business closures decreased by 1.3% since the previous month. The number of business openings was down 6.9% and has been steadily declining since its 2020 peak in June. Despite this decrease in business openings, the number of active businesses continued to edge up slightly in January, but was 2.2% lower than one year earlier.

With the exception of Nova Scotia and Quebec, which recorded increases in business closures of 6.3% (+43) and 1.4% (+94), respectively, business closures have decreased across the provinces and territories since December 2020. In percentage terms, the largest declines in business closures were observed in the Prairies and in British Columbia. Notably, business closures in Saskatchewan were 26.3% lower than in January 2020, and, in British Columbia, they were down 21.4%. These provinces implemented less stringent public health restrictions in December 2020 than the central provinces.

Business closures increase in January 2021 in the industries most affected by public health restrictions

Decreases in the number of business closures were relatively widespread across industries, except in other services (except public administration) (+12.3%; +358) and in retail trade (+3.2%; +75), where increases in closures were observed. Minor increases of under 2.0% since December 2020 were observed in the arts, entertainment and recreation industry, and in the accommodation and food services industry. Greater closures in January 2021 relative to the previous month in these four industries may be attributable to extended public health restrictions, which tend to have a greater impact on these industries. In the tourism sector, the number of business closures decreased in January 2021 for the first time since August 2020. However, the number of business openings was down 9.1% (-351) from December 2020 to January 2021 in this sector, leading to a decline in active businesses of 0.8% (-534).

The number of active businesses in the industries most impacted by the pandemic remains lower than that observed in January 2020

While the number of business openings has decreased since December 2020, the number of active businesses in the Canadian business sector continued to increase. However, compared with one year earlier, there were nearly 20,000 fewer businesses in the Canadian business sector. In most industries, the number of active businesses was at least 3% lower than in January 2020. In particular, there were 9.5% fewer businesses in accommodation and food services and 7.1% fewer in arts, entertainment and recreation, industries that were hit hard by the pandemic. In contrast, there were 1.6% more businesses in professional, scientific and technical services, compared with one year earlier, and 0.7% more in transportation and warehousing. The professional, scientific and technical services industry was not impacted as heavily as the tourism sector in terms of business closures, and entrants in this industry made an important contribution in 2020.

Source: Statistics Canada, https://www150.statcan.gc.ca/n1/daily-quotidien/210426/dq210426c-eng.htm?CMP=mstatcan