Post Pandemic Business Recovery: Some Are Doing Better Than Others

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.

Ontario's Partial Post-Pandemic Employment Rebound

 

Like just about everywhere else in the world, Ontario was hit hard by the job losses that resulted from the assorted lock-downs and coronavirus containment strategies of the COVID-19 pandemic.  Figure 1 presents seasonally adjusted monthly employment data from Statistics Canada for Ontario from 2006 to the present.  From February 2020 to June 2020, Ontario lost 990,000 jobs or 13.2 percent of its employment. These losses, however, were not uniform in size across the major urban centers of the province.  

 

 

 

Figure 2 plots the ranked employment losses from the start of the pandemic in February when the monthly employment losses began to June 2020 when the rebound begins and going  from worst to best performers.  Hardest hit with a 25 percent drop in employment was Belleville, followed by Windsor at 18 percent and then Thunder Bay at 16 percent. The three lightest hit cities were Ottawa with a 10 percent drop, Brantford at 7 percent and Guelph at just below 7 percent.  

 

 

 

With the exception of Barrie, all of these cities have managed to bounce back since June as Figure 3 illustrates.  The largest rebound as was the largest drop happened in Belleville.  Belleville saw employment rise 25 percent and was followed by London at 16 percent and Kingston at 15 percent.  The smallest rebounds aside from Barrie which appears to have continued to shrink were Guelph at 6 percent, Sudbury at 5 percent and St. Catharines-Niagara at 4.5 percent.  

 

 

 

Despite the rebound, only two of these urban areas have managed to recover enough employment to be at more employment than the start of the pandemic drop in February – Kingston and London – though not by much.  Others still have a gap and it varies substantially.  Ontario as a whole is currently at about 96 percent of its February 2020 level of employment. Figure 4 ranks the cities by their employment in February 2021 as a percentage share of their February 2020 employment.  Thunder Bay, Windsor, Sudbury, St. Catharines-Niagara and Barrie have recovered the least.  Thunder Bay is only at 93 percent of its pre pandemic level of employment followed by Windsor at 92 percent, Sudbury at 91 percent, St. Catharines at 88 percent and Barrie at 84 percent.  On the other hand, after Kingston and London, Brantford and Guelph are at just over 99 percent of pre-pandemic employment.  

 

 

 

Overall, Ontario has seen a remarkable 12 months with massive employment losses and a rather large rebound, but which only puts it back at about 2018 levels in terms of employment.  There is still  a lot of recovery to go.