The business opening rate in Canada decreased from 4.7 per cent in May to 4.2 per cent in June 2022 and was the largest drop in the opening rate since August 2020 and its lowest level since March 2020, according to a report released Monday by Statistics Canada.
The federal agency said the opening rate was below its 2015-to-2019 historical average (4.7% per cent for the first time since June 2021. The business closure rate contracted slightly and settled 0.1 percentage points (pp) below its historical average of 4.6 per cent. The number of active businesses remained relatively unchanged from May to June, it added.
“The decrease in the business opening rate in June was mainly driven by a decrease in business re-openings. In fact, the re-opening rate fell by 0.4 pp, whereas the entry rate edged down 0.2 pp. Both the re-opening and the entry rate were 0.3 pp below their respective historical averages. Furthermore, the entry rate has been decreasing since March 2022. From March to June 2022, evidence from the Canadian Survey on Business Conditions indicated that inflationary pressures, labour challenges and supply chain issues were impacting businesses. The Bank of Canada’s policy interest rate also started increasing in March,” explained StatsCan.
“In June, the business opening rate decreased in all provinces and territories. It was mainly driven by Ontario, where the opening rate dropped by 0.7 pp (-2,336 businesses), followed by Alberta (-0.5 pp; -587) and Quebec (-0.2 pp; -527). In all provinces and territories, the opening rate settled below its historical average in June and was at its lowest level since at least August 2021.
“On the industry side, the decline in the business opening rate was also widespread. Professional, scientific and technical services (-0.7 pp; -801 businesses) and construction (-0.5 pp; -661) drove the decline, followed by health care and social assistance (-0.4 pp; -438) and accommodation and food services (-0.7 pp; -424). Across the majority of the industries, the gap between the opening rate and its historical average has widened from May to June.”
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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