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January 25, 2021BUSINESS OPENING AND CLOSING, OCTOBER 2020 Statistics Canada released updated data on monthly business openings and closures for October 2020. With today's release, there have been historical revisions to reflect updated patterns of seasonality.
A business will be classified as open if it 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 declined sharply in every province in March, April and May. In June and July, the number of businesses started to recover, with gains in all provinces.
Additional public health measures were implemented across some provinces in October and November to limit the spread of the second wave of the pandemic. Statistics Canada noted that the number of business closures increased in every province except Prince Edward Island. However, the number of business openings increased faster in all provinces, outpacing rising business closures and contributing to a net gain in active businesses for all provinces except Quebec from September to October.
In October, active businesses increased in all provinces except Quebec (-0.2%). The number of active businesses in Nova Scotia increased 0.9% from the previous month, compared to a 0.6% increase for Canada. Newfoundland and Labrador (+1.2%) posted the largest monthly gain across all provinces.
Compared with February 2020, the number of active businesses was down 4.5% for Nova Scotia in October. Nationally, active businesses declined by 6.7% from February to October 2020. The number of active businesses was down in all provinces compared to February 2020, with the largest decline experienced in Ontario (-8.4%).
Among cities (Census Metropolitan Areas), the declines in active businesses from February to October were most severe in Toronto (-8.2%), Guelph (-7.4%) and St. John's (-7.0%). There were 3.2% fewer active businesses in Halifax in October when compared to February 2020. This was a more moderate decline than in the rest of Nova Scotia.
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 to see how number of active business has changed.
Most businesses continue operating each month. At the height of COVID-19 related restrictions, the share of businesses that continued to operate from one month to the next fell to 89.0% in Nova Scotia, down from 95.7% in February 2020. National continuing rates fell from 94.9% in February to 89.0% in April.
Business continuing rates rose sharply by July, reaching 95.6% in Nova Scotia and 95.8% nationally. Since then, there has been some decline with October business continuing rates slipping to 95.2% in Nova Scotia and to 94.5% nationally.
Nova Scotia’s business opening rate declined from 4.3% in February to 3.2% in April. By June, the Nova Scotia business opening rate increased to 8.1% as the economy re-opened and restrictions were lifted. From July to October, Nova Scotia's business opening rate declined back to near pre-pandemic levels, falling to 5.2% in October. Nationally, the opening rate did not decline substantially in March and April, but increased in June and July. Since July, the national business opening rate has declined, falling to 5.6% as of October.
The rate of business closures in Nova Scotia was 4.2% in February 2020. This increased to 14.9% in April and has subsequently fallen to 3.5% in October. Nationally, the business closing rate increased from 4.7% in February to 13.1% in April. As of October, the national business closing rate was 4.3%.
The COVID-19 situation has impacted business sector industries to different degrees. Nova Scotia active business were lower in all sectors when compared to February. Nova Scotia's largest declines have been in accommodation/food services (-9.4%). Nationally, there has been a steeper declined in accommodation/food services as well as arts/entertainment/recreation and personal/repair services.
Statistics Canada has broken out specific data for tourism-related industries. This shows that the number of active tourism-related businesses was down 8.6% in Nova Scotia from February to October. Nationally the decline was 10.2%. Compared to the national average, Nova Scotia has had larger declines among active businesses in transportation and accommodations. Nova Scotia's declines in active tourism businesses have been smaller than the national average for travel services, recreation/entertainment and food/beverage services.
Most industries in Nova Scotia that have reported declines in active businesses have seen partial or complete recovery underway since May.
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; Methodology: Business Opening and Closing
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