Business Openings Up 6.1% in February; Closures Up 10.4%

Business Openings - February 2021

May 31, 2021

In February, as public health restrictions were eased in many provinces, the number of business openings increased 6.1%, of which the majority (62.4%) was due to the number of reopening businesses, unchanged from last month. The number of business closures also rose compared with January, up 10.4%. Indeed, the number of business closures has been trending up since August 2020, but returning to historical levels. However, as the number of business closures continued to be lower than that of business openings, the number of active businesses in February edged up. Despite this slight increase, the number of active businesses in February was down 1.9% compared with February 2020.

Business closures rose in every province and territory from January to February, except Yukon, where closures were relatively unchanged. Ontario recorded the largest increase in business closures, up 19.0% (+2,858) from January. While public health restrictions were eased in some regions of Ontario in early February, a stay-at-home order remained in place throughout the month in other regions, such as Toronto and Peel. In contrast, in Quebec, despite an extended curfew, business closures edged up 1.2% (+83)—the smallest percentage increase among the provinces.

The number of active businesses continues to lag behind pre-pandemic levels in most provinces

Across most of the country, while the number of active businesses continued on an upward trend, it remained below the pre-pandemic levels recorded in February 2020, or one year prior to the most recent month for which data are available. In particular, the number of active businesses in Ontario (-4.5%) and Newfoundland and Labrador (-4.4%) remained lower compared with one year earlier. In contrast, in Yukon, Nunavut and British Columbia, the number of active businesses in February 2021 surpassed pre-pandemic levels, with increases up to 1%. As public health restrictions were re-introduced in British Columbia in late March, it remains to be seen whether the trend in active businesses will continue.

If the number of active businesses in Canada continues to grow at a pace similar to that of the last few months (average growth of 1.0% per month), it is expected to return to its pre-pandemic level by May 2021.

Business closures trending up in industries most affected by public health restrictions, but returning to historical levels

Similar to provincial results, increases in the number of business closures were relatively widespread across industries, except other services (except public administration) (-2.6%; -446) and manufacturing (-2.5%; -30), where closures decreased. In the industries most affected by the pandemic, namely accommodation and food services, arts entertainment and recreation, and retail trade, the number of business closures has been trending up since August 2020 and were more than 10% higher than the level observed in February 2020. Nevertheless, as business openings exceeded closures in these industries, the number of active businesses continued to grow, albeit at a slow pace.

The increase in business openings from January to February 2021 was largely driven by the rise in business openings in other services (excluding public administration) (+64.6%; +1,727) and accommodation and food services (+7.8%; +267). The shares of business reopenings in these two industries (77.2% and 79.6%, respectively) were above the business sector average of 62.7% and about 10 percentage points higher than one year earlier. This may be attributable to the easing of public health restrictions in many provinces, which allowed businesses in these industries to re-open.

Source: Statistics Canada, www150.statcan.gc.ca/n1/daily-quotidien/210528/dq210528c-eng.htm?CMP=mstatcan

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