Monthly estimates of business openings and closures, August 2022
In August 2022, the number of active businesses (-0.3%; -2,529) dropped for the second consecutive month. This decline is consistent with the variation in employment as measured in the Labour Force Survey, which posted slight contractions in both July and August 2022. The decline in the number of active businesses was mainly driven by the increase in the business closure rate from 4.6% in July to 4.9% in August. The business opening rate (4.4%) slightly declined, driven by the 0.1 percentage point decrease of the reopening rate whereas the entry held steady at 1.8%.
The decline in the number of active businesses in August 2022 was widespread across all provinces and territories. The decrease was mainly driven by Ontario (-0.3%; -994) and Quebec (-0.5%; -916), followed by Alberta (-0.2%; -265).
In August 2022, the number of active businesses decreased in every industry apart from real estate and rental and leasing (+0.3%; +108) and professional, scientific and technical services (+0.1%; +73). Other services (except public administration) (-0.7%; -506) showed the largest decline, followed by retail trade (-0.4%; -346) and transportation and warehousing (-0.5%; -266).
The increase in the closure rate in August 2022 was widespread across most industries. Accommodation and food services (+0.3 percentage points; +207), retail trade (+0.2 percentage points; +183) and construction (+0.1 percentage points; +170) drove the increase in the business closure rate. Apart from professional, scientific and technical services (4.9% closure rate versus 5.1% historical average) and finance and insurance, and management of companies and enterprises (4.7% versus 5.1%), the closure rate was higher than its historical average in all services-producing industries. Transportation and warehousing (+1.1 percentage points) and accommodation and food services (+0.8 percentage points) posted the highest gap between the closure rate and its historical average.
In August 2022, the opening rate contracted or remained unchanged in every industry. Health care and social assistance (-0.5 percentage points; -488) followed by professional, scientific and technical services (-0.3 percentage points; -349) and other services (except public administration) (-0.5 percentage points; -340) drove the decline of the business opening rate. The opening rate was below its historical average in all industries except for transportation and warehousing (6.3% versus 6.2%) and real estate and rental and leasing (5.6% versus 5.4%).
The series on temporary business closures and exits (or "permanent closures") is now updated to include data up to February 2022. The exit rate rose from 1.5% in January to 1.7% in February 2022, equal to its 2015-to-2019 historical average.
In February 2022, the exit rate held steady or increased slightly in most industries. Transportation and warehousing (+0.4 percentage points; 2.7%) posted the highest variation in exit rate compared with the previous month, widening the gap with its historical average of 1.5%. It is also the industry where the exit rate was furthest from its historical average. On the other hand, accommodation and food services (1.2% exit rate versus 1.6% historical average) continued to post the lowest exit rate compared with its historical average.
Monthly business openings and closures as a percentage of active businesses, business sector, Canada, January 2021 to August 2022, seasonally adjusted series
Percentage point difference in the business opening and closure rates from July to August 2022, by industry, seasonally adjusted series
Monthly exits as a percentage of active businesses, by industry, Canada, February 2022, seasonally adjusted series
Note to readers
The June 2022 and subsequent geographic locations are based on the 2021 Census of Population geography.
April 2022's release introduced a new process for seasonal adjustment in the presence of the outliers generated by the response to the COVID-19 pandemic. The new process has a greater number of outliers that are explicitly recognized at the outset of the seasonal adjustment process. This leads to a greater number of outliers being taken into account than was previously occurring. Examinations of seasonally adjusted data using the new process show results that are more stable over time and produce smaller revisions.
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. Re-opening 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 for a business 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. These businesses will be counted once at the national and provincial levels in the monthly estimates of openings and closures. 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 they can be in different industries and geographies. Such businesses can be counted more than once in the monthly estimates of openings and closures 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.
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; email@example.com) or Media Relations (firstname.lastname@example.org).
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