Statistics Canada has come out with “experimental estimates for business openings and closures for Canada, provinces and territories, census metropolitan areas, seasonally adjusted”. The data is through April 2020 so we are starting to see how Covid-19 is impacting the business community.
First a definition. Statistics Canada defines closing businesses are “businesses that transition from having at least one employee in the previous month to having no employees in the current month.” This doesn’t mean they are permanently closing. In addition, it is only available for the province and CMAs.
In the Moncton CMA, in a typical month, there are 117 business closures (going back to January 2015). In April 2020 there were 299 closures – or 2.5 times as many as normal. In Saint John, there are typically 98 closures and there were 251 in April 2020 – or 2.5 times as many as normal just like Moncton. Across the rest of the province, there are typically 480 closures in a normal month compared to 960 in April 2020 – only about double the increase in closures.
This is a first look at this of course. Moving forward it will be important to track this closely as there are thousands of businesses across the province that are trying to make a go of it with social distancing, higher costs and skiddish customers. How many of these can survive six months? 12 months? We shall see.
There is a general principle in this data too. Business closures are not necessarily a bad thing. In a typical month across Canada there are 38,000 business closures. The real issue is the ratio of business starts to closures.
In Moncton, for example, for every 1000 closures there are 1014 business openings – going back to 2015 (excluding April 2020). Roughly the same average monthly ratio of openings to closures in Halifax. Saint John has been slightly below 1 to 1. Across Canada the ratio is slightly above 1 business start to 1 business closure.
Interestingly, using this approach, Ontario does the best in terms of openings to closings. At least going back to 2015. Prince Edward Island is also interesting given its attraction of so many immigrant investors in recent years. Moncton is the highest ranking CMA on this list going back to 2015.