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People walk by a shuttered business in Montreal, Oct. 10, 2021.Graham Hughes/The Canadian Press

The number of monthly business closings overtook the number of openings for the first time since the early weeks of the pandemic last year, according to Statistics Canada.

Statscan reported Monday that 43,111 businesses closed in August, while 41,795 opened. It was the first time there were more closings than openings since May, 2020. Business closings peaked in April, 2020, while openings peaked two months later, both driven by the initial large wave of lockdowns and reopenings ordered by public-health authorities because of the COVID-19 pandemic.

There were 903,177 active businesses in August, slightly more than there were before the pandemic, but down from June and July.

Statscan noted the number of active businesses dropped in all provinces and territories except for Quebec and Nunavut. The largest decline was in Ontario, which had net 2,367 fewer active businesses.

The data provide another indication that Canada’s economic recovery slowed in late summer after the statistics agency previously reported that the country’s gross domestic product grew a tepid 0.4 per cent in August.

Jimmy Jean, chief economist at Desjardins Group, said the data suggest that most businesses that suffered lockdowns in the spring had reopened in June and July, which could explain why the number of openings was down in August.

“In August, a majority of businesses that were previously under lockdown were able to function close to normal,” he said.

Business closings have been relatively low throughout much of the pandemic, which experts have generally attributed to government support programs, such as wage and rent subsidies. Those programs ended for most businesses in October, but continue for firms in hard-hit industries, such as restaurants and gyms.

Sohaib Shahid, director of economic innovation at the Conference Board of Canada, said he expected business closings to further outpace openings as Canada heads into the winter months. He said supply disruptions and the winddown of federal aid will take their toll on businesses.

“Today’s data are a harbinger of things to come,” Mr. Shahid said.

Openings were up modestly for food, tourism and cultural businesses, which have been hit hardest by pandemic restrictions, as well as in education and health care. All other sectors were down, led by agriculture and transportation businesses. Statscan noted there was a rare contraction for the manufacturing industry, which saw 200 companies close in August.

The Canadian Manufacturers & Exporters said it did not want to overreact to one month of disappointing data since the past year has been generally positive. However, the industry group said the sector is facing numerous headwinds, including supply chain disruptions. The global semi-conductor shortage in particular, which affects auto makers, may explain why Ontario saw a drop in manufacturing activity in August.

“Recent indicators suggest that the recovery in the manufacturing sector is stalling, so the drop in active businesses would be consistent with this slowdown,” president Dennis Darby said in a statement.

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