The COVID-19 pandemic had a devastating effect on Canada’s business sector and new data is emerging that helps illustrate the size of the drop in business activity as well as the subsequent recovery. Figure 1 uses data from Statistics Canada (Table 33-10-0270-01 Experimental estimates for business openings and closures for Canada, provinces and territories, census metropolitan areas, seasonally adjusted) to generate an index of active businesses for four Ontario cities as well as the province of Ontario. It sets January of 2016 equal to 100. For example if in January of 2016 you had 1200 active business and in January of 2023 you had 1500, then January of 2016 would be equal to 100 and January of 2023 would be 125. Everyone starts at 100 in order to generate comparisons that would not be easy to see if the absolute number of business are used. For example as of January 2023 Thunder Bay had 2,832 active business while Toronto had 192,016 which would not yield terribly useful visuals if plotted together.
The chart is for Ontario and four cities: Thunder Bay, Greater Sudbury, Toronto and Hamilton. With the exception of Thunder Bay and Sudbury, there was growth in the number of active businesses from 2016 to 2020 and then a dramatic drop which affected everyone. From January to May 2020 there was 14.6 percent drop in the number of active Ontario businesses. Toronto saw a drop of 15.8 percent followed by Hamilton at 13.4 percent, then Thunder Bay at 11.5 percent and Sudbury at 10.3 percent. A recovery then begins but Thunder Bay and Sudbury unlike Ontario as a whole or Hamilton or Toronto barely match their pre-pandemic number of active businesses by 2023. Indeed, if one looks at the entire 2016 to 2023 period(See Figure 2), Thunder Bay sees a decline of 3.8 percent while Sudbury is down one one-tenth of one percent. Relative to 2016, the number of active businesses is up 8.6 percent in Toronto, 9.3 percent in Hamilton and 7.9 percent in Ontario as a whole.
Pandemic impact aside, Thunder Bay and Sudbury seem to be
suffering from a longer term set of problems with business activity given that
they were experiencing a decline prior to the pandemic. Between January 2016 and December 2019,
Thunder Bay saw 124 fewer active business while Sudbury saw 40 fewer
business. After the pandemic drop, both
of these cities recovered but only to approximately where they were prior to
the pandemic. Over the longer term,
business formation has been weak and represents a serious economic challenge.