Business and employment dynamics data at the national level, 2019
Archived Content
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please "contact us" to request a format other than those available.
Released: 2021-09-02
Entry rate of new firms in 2019 at its highest level since 2009
The COVID-19 pandemic had a significant impact on business dynamics over the last 18 months. Monthly data on business openings, closures and entrants up to May 2021 are available (see Monthly estimates of business openings and closures, May 2021). Today's release focuses on the long-run trends in entry and exit using less frequent data that allow for additional verifications that entrants are entirely new firms.
In 2019, the entry rate for private-sector employer businesses (14.1%) was at its highest level since the end of the recession in 2009. The entry rate was 1.4 percentage points higher than the rate of 12.7% in 2018; 1.2 percentage points higher the 12.9% average entry rate over the 2009 to 2018 period; and 0.6 percentage points lower than the average entry rate over the 2002 to 2008 period.
The entry of new firms is important because they help bring new ideas and products into the economy. Over the last four decades, entry rates have declined in Canada. This has raised concerns about a possible loss of dynamism in the economy.
Despite the increase in the entry rate, gross employment creation by entrants remained stable at 1.4% in 2019, the same as in 2018. This is in the context of an increase in private sector net employment growth from 1.9% in 2018 to 2.3% in 2019. Net employment growth is a measure of the total change in the number of jobs among private sector employers. In 2019, net employment growth arose from changes in four subcomponents: employment creation by entrants (+1.4%), employment creation by growing incumbents (+8.5%), employment destruction by exits (-1.3%) and employment destruction by declining incumbents (-6.4%).
An explanation for the stable gross employment creation by entrants is that all of the increase in the number of entrants from 2018 to 2019 occurred in the smallest category (less than 5 employees). The number of entrants declined in the 5 to less than 20, 20 to less than 50, and 50 to less than 100 employee categories.
The transportation and warehousing industry contributed significantly to the increase in the number of entrants from 2018 to 2019. The transportation and warehousing industry alone accounted for 23.0% of the increase, which is much higher than its 7.2% share in employer businesses in 2018. The number of entrants also increased significantly in professional, scientific and technical services, construction, retail trade and other services.
Final annual estimates of business and employment dynamics in the private sector at the national level, broken down by North American Industry Classification System industry or by firm size class and drawn from the Longitudinal Employment Analysis Program, are now available for 2019. The new estimates for 2019 are being added to existing data tables that contain annual estimates going back to 2001.
The long-run trends in entry and exit rates are documented in Business Entry and Exit Rates in Canada: A 30-year Perspective.
Chart 1
Entry and exit rates, private sector employer businesses, 2002 to 2019
Note to readers
The private sector covers all industrial sectors except those primarily involved in educational services, health care and social assistance, and public administration. It includes unclassified businesses.
The annual business entry and exit estimates and the monthly estimates of business openings and closures are related, but present some differences. The annual estimates are based on the Longitudinal Employment Analysis Program, which uses T4 records and statistical enterprises from the Business Register to form longitudinal firms. The availability of the annual T4 data allows the creation of additional longitudinal firm links between apparent exits and entrants that share a large percentage of employment. See The Measurement of Firm Entry in the Longitudinal Employment Analysis Program for more details. In contrast, the monthly estimates of business openings and closures are more timely because they are based on the Business Register and the monthly PD7 Payroll Deduction files. See Monthly Business Openings and Closures: Experimental Series for Canada, the Provinces and Territories, and Census Metropolitan Areas for additional details. Furthermore, the definitions of opening and closure depend on the month-to-month change in the employer status of a business, while the definitions of entrant and exit depend on the employer status of a business over a longer period.
Products
For quarterly estimates, see the Daily release "Quarterly estimates of business entry and exit, fourth quarter 2019."
For monthly estimates of business openings and closures, see the Daily release "Monthly estimates of business openings and closures, May 2020."
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).
Report a problem on this page
Is something not working? Is there information outdated? Can't find what you're looking for?
Please contact us and let us know how we can help you.
- Date modified: