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August 05, 2020BUSINESS OPENING AND CLOSING EXPERIMENTAL SERIES, 2015-2020 Statistics Canada has released a new experimental series on monthly business openings and closures for the period 2015 through April 2020. A new study details the methodology behind these measures. Business openings and closures differ in concept from business entry and exits. A business will be classified as open if had no employment in the previous month and then has employment in the next month and a business will be closed if it had employment the previous month and no employment in the current month. For opening and closing, the reason could be a permanent change (i.e. business exit) or temporary for reasons such as seasonal operations, capital maintenance, restructuring or the COVID-19 situation. Continuing business are those that had employment in both the current and previous month. Active businesses are the sum of continuing and opening business in the current month.
The number of active business in Canada and Nova Scotia had been trending upwards from 2015 through 2019. The average number of active business in Nova Scotia in 2019 was 1.4 per cent larger than in 2015; Canada increased 2.2 per cent. The number of active business has declined sharply in March and April 2020 in all provinces.
Compared to April 2019, the number of active business in all provinces was lower in April 2020. Nova Scotia had 9.3 per cent fewer active businesses and nationally there were 10.9 per cent fewer. Nova Scotia had 17,470 active business in April 2019 and 15,842 in April 2020 - a decrease of 1,628 active businesses. Ontario (-12.0%) reported the largest decline and Manitoba (-6.5%) the smallest.
The calculation for the opening, continuing and closure rate have been made based on the number of active business in the previous month. The rate at which business either opened, continued or closed can be examined see how number of active business has changed. Opening rates are lower than average historical levels for Canada and Nova Scotia. The business opening rate for Nova Scotia was 3.2 per cent in April 2020 down from 4.8 per cent in April 2019. British Columbia is the only province with a higher opening rate in April 2020. The opening rate change is more modest compared to the change from closures.
Most businesses continue operating each month and Nova Scotia and Canada have had similar business continuing rates over the 2015 and 2019 period of around 95 per cent. The business continuing rate began to decline in March 2020 and has fallen to historically low levels amid the COVID-19 pandemic. The continuing rate was 89.1 per cent in Nova Scotia and 88.4 per cent in Canada in April 2020. The lowest continuing rate was in Ontario (86.8%) and the highest was in Manitoba (91.3%).
Business closures, including temporary closures, increased in all provinces for April 2020 compared to April 2019. For Nova Scotia, there were 821 business closures in April 2019 which increased to 1,869 in April 2020. The business closure rate in Nova Scotia and Canada have increased similar amounts. The highest closure rate was in Ontario (13.2%) and lowest was in Manitoba (8.7%) in April 2020.
The COVID-19 situation has impacted sectors to different degrees. Nova Scotia active business are lower in all sectors except information and cultural industries. Canada had lower active business in all sectors compared to April 2019. Nationally, declines have been largest in accommodation and food services, others services including personal services, retail trade, and arts, entertainment and recreation.
There are some noticeable declines in the number of active business for the April 2020 month. Among goods-producing sector, fewer active business in Nova Scotia have mostly been in agriculture, forestry, fishing and mining (-29), construction (-304) and manufacturing (-61).
Among service-producing industries, some of the largest declines have been in the sectors with the most businesses. Retail trade (-290), accommodation and food services (-232), and other services (-224) have reported the largest declines in number of active businesses compared to last year.
Wholesale (-72), transportation (-32), real estate and rentals businesses (-45), and administrative and support services (-80) all have notable declines in the recent months impacted by COVID-19.
The number of active business in information and cultural industries and finance and insurance are little changed from historical levels in April 2020.
All Census Metropolitan areas (CMAs) reported fewer active business in April 2020 compared to the previous year. Halifax reported 7.4 per cent fewer active business, a smaller decline than the Nova Scotia (-9.3%). The largest decline among the CMAs was in Windsor (-14.3%) and the smallest was in Sherbrooke (-6.0%).
The source data is seasonally adjusted. The data may not aggregate due to firms being classified into multiple industry or geography.
Source: Statistics Canada. Table 33-10-0270-01 Experimental estimates for business openings and closures for Canada, provinces and territories, census metropolitan areas
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