Canada Hits A Record For Active Businesses, Growth Driven By Real Estate

Canada is tripling down (quadrupling?) on its real estate-based economy. Statistics Canada (Stat Can) data shows the number of active businesses hit a new record in September. That’s the good news, which loses a little luster when examining the details. The country’s national statistics agency attributed most growth to just a handful of real estate-related industries. The record also appears to be in conflict with other economic indicators, such as falling payroll employees, rising unemployment, and lofty business insolvencies. 

Canada Hits A New Record For Active Businesses

Seasonally adjusted Canadian active businesses.

Source: Stat Can; Better Dwelling. 

Canada just saw the number of businesses in the country hit a new record, and it’s about time. The seasonally adjusted active business count rose 0.2% (+1.53k businesses) to 939.17k in September. This comes after 4 consecutive months of declines, and makes up more than a third of the 0.5% (+4.22k businesses) added over the past 12 months. A new record high sounds like great news, but the finer details dampen much of the enthusiasm.  

Canadian Business Growth Is Tepid In Contrast With Population

Typically a population boom is the result of a booming economy, but growth remains tepid. Annual growth of 0.5% in September is almost a sixth of the population’s rate. By itself that shows a bit of a problem. It makes even less sense when the annual rate is half the size seen in 2019, before the record population started to flood in. 

Canadian Businesses Concentrated Around Real Estate & State-Subsidized Industries

The agency notes that just a handful of industries were behind most of the growth. Construction (contributed 40%), followed by Administration and Support, Waste Management and Remediation Services (27.5%), and Real Estate, Rental & Leasing (17%). It’s worth noting that all three of these areas aren’t just overlapping; they’ve also seen significant state-supports in recent months. Most of the new business growth is apparently tied to accommodating the population growth. 

The return of net positive business growth also struggles to make sense in the context of other data. Rising active businesses fits the narrative of rising GDP, especially with the revisions. However, it’s accompanied by the odd combination of falling payroll employment (-0.3%), a declining unemployment rate, and rising business insolvencies in September. More businesses with fewer employees isn’t exactly a neat picture of the economic landscape—but it’s the one being painted. 

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  • Amatsi 1 month ago

    It’s classic antiselection. The govts reward investments in housing, which trmoves investment from practical and productive industries, doubling down on dumb. The problem is that ewithout an 3conomy that generates exports,we cant afford to buy any of these ghouses, so very soon this bubble will burst, and it will all havebeen a big pozi scheme.

  • Richard Allen 1 month ago

    I am not sure if this anecdote matters, but I have a circle of friends/acquaintances that are small business men. removing the self employed (including me) there are 7 guys, and other than the one that started his construction business 20+ years ago, all six got grants to start their businesses. I found that very odd.

    • Jyo 1 month ago

      Don’t buy anything hard cash important.. we never know what will happen next

  • Yoroshiku 1 month ago

    Canada’s entire economy is heavily dependent on real estate so the gov’t does what’s necessary to prop it up, including slashing interest rates to reinflate the sagging bubble, before inflation was under control.

  • Bryan 1 month ago

    This government in particular is all about penalizing and subsidizing, it’s just a hostile place to do business unless you are in a preferred industry.

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