Monthly estimates of business openings and closures, December 2021
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: 2022-03-29
The number of active businesses declined in December 2021. The change was driven by both a decrease in the business opening rate (business openings as a percentage of active businesses) from 4.7% in November 2021 to 4.4% in December, and an increase in the business closure rate from 4.3% to 5.0%. For a business to count as a closure in December, they would need to have no employment the entire month. Thus, the December increase in the closure rate does not fully reflect the impact of the Omicron wave.
From November to December 2021, the reopening (new businesses as a percentage of active businesses) held steady at 1.6%, somewhat lower than its 2015-to-2019 historical average of 1.8%. The reopening rate decreased from 3.1% to 2.8%, slightly below its historical average of 2.9%. The decrease in the reopening rate was driven by Ontario, where the entry rate fell from 3.3% to 2.9%.
Some sectors habitually have higher closure rates than others, and the closure rate for a sector should be compared with its historical closure rate rather than the closure rates for other sectors. In December 2021, the sectors with closure rates furthest from their historical averages were mining, quarrying, and oil and gas extraction (6.2% vs. 5.3%), utilities (4.9% vs. 4.0%), and transportation and warehousing (6.7% vs. 5.9%).
Exit rate of businesses rises in June 2021
The series on temporary business closures and exits (or "permanent closures") is now updated to June 2021. From May to June, the temporary closure rate held steady at 2.8%, close to its 2015-to-2019 average of 2.9%. The exit rate rose from 1.5% to 1.7%, equal to its historical average of 1.7%.
While the exit rate was equal to its historical average at the national level, several sectors continued to have exit rates above their historical average. The largest difference was in the arts, entertainment, and recreation sector, which had an exit rate of 2.7% in June 2021 compared with its historical average of 1.5%. Other sectors with a large difference between the June 2021 rate and the historical rate were real estate and rental and leasing (3.0% vs. 1.9%), transportation and warehousing (2.3% vs. 1.5%), and professional, scientific and technical services (2.2% vs. 1.7%).
Chart 1
Change in the number of active businesses, business sector, January 2019 to December 2021, seasonally adjusted series
Chart 2
Monthly closures as a percentage of active businesses, by industry, Canada, December 2021, seasonally adjusted series
Chart 3
Monthly exits as a percentage of active businesses, by industry, Canada, June 2021, seasonally adjusted series
Note to readers
Every new month of data leads to a revision of the previously released data due to such factors as the seasonal adjustment process and a new version of the Generic Survey Universe File (or vintage of the Business Register). As such, the estimates may vary compared with a previous release.
Openings are defined as businesses with employment in the current month and no employment in the previous month, while closures are defined as businesses that had employment in the previous month, but no employment in the current month. Continuing businesses are those that have employees in both months, and the active population in any given month is the number of opening and continuing businesses in that month. Reopening businesses are defined as opening businesses that were also active in a previous month (that is, they closed in a given month and had positive employment in a subsequent month). In contrast, entrants are opening businesses that were not active in a previous month.
The definition of exits is based on the Longitudinal Employment Analysis Program (LEAP) annual exits. Because the LEAP definition can require up to 24 months of data to be counted as an exit, projections of exits using predicted growth rates are implemented using a regression model of exits on closures of more than six months. As a result, there are no published exits in the last six months. A temporary business closure is the difference between closures and exits. For more information on temporary business closures and exits, see "Defining and measuring business exits using monthly data series on business openings and closures."
A business is defined as an enterprise operating in a particular geography and industry.
The vast majority of businesses operate in one industry and one location or geography. For these businesses, in the monthly estimates of openings and closures, they will be counted once at the national/provincial level. For example, a retailer in Windsor, Ontario, will be counted as an active business in the Ontario estimates and once in the national estimates.
Some businesses can have multiple operations, and these can be in different industries and geographies. For such businesses, in the monthly estimates of openings and closures, they can be counted more than once because they are active in multiple industries or geographies. For example, if a retailer has operations in both Alberta and Ontario, it will be counted as an active business in both provinces, but only once at the national level because it represents only one active firm. Similarly, a firm with retail and wholesale operations will be counted in both industries when individual industries are examined. However, when the business sector is examined, the firm counts only once because at that level it represents one firm active in the business sector.
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; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
- Date modified: