An overlooked—but important—trend in the latest Statistics Canada releases: for the fifth quarter in a row, business exits are outpacing business entries in Canada, says Andreea Bourgeois, Director Economics at Canadian Federation of Independent Business (CFIB).
In a LinkedIn post, she said this isn’t a sudden pandemic‑style drop.
“It’s a steady slowdown in business creation combined with higher exit numbers. In T1 2025, the latest quarter with both entry and exit data available, the entry rate was 4.7% compared to an exit rate of 5.8%,” noted Bourgeois.
“Regionally, every province is in negative territory except Quebec, where entry and exit rates are roughly balanced. The widest gaps are in NL, PEI, and Ontario.
“By sector, only health and education are seeing positive net business creation. Hospitality is doing “less bad” than most sectors but still negative.
“Bottom line: Canada is quietly losing businesses—quarter after quarter—and it’s not getting the attention it deserves. At this pace, by the next Winter Olympics we won’t just be short on business creation, we might be short on sponsors for Team Canada’s jackets.”
In its most recent report, Statistics Canada said that In October, the business opening rate dropped by 0.3 percentage points to 4.5%, following a slight increase of 0.1 percentage points in the previous month. The opening rate was 0.2 percentage points below its 2015-to-2019 historical average. The decrease in the opening rate was driven by the 0.2 percentage point decline in the re-opening rate (2.9%), while the entry rate (1.7%) was relatively unchanged.
The business closure rate rose by 0.2 percentage points to 4.9% in October, after declining over the previous two months. The business closure rate was 0.3 percentage points above its historical average. Business closures increased or changed little in all sectors, said the federal agency.
“The number of active businesses decreased by 0.2% (-1,740 businesses) in October, as the number of business closures was higher than that of business openings. In the same month, payroll employment increased by 0.1% and real gross domestic product decreased by 0.3%. Business insolvency filings increased by 7.3%, from 395 in September to 424,” it said.
“In October, the number of active businesses dropped or changed little in all sectors. Professional, scientific and technical services (-776 businesses; 23.4% contribution to the decrease) and construction (-668; 20.1%) led the decrease in the overall number of active businesses. This was followed by retail trade (-323; 9.7%) and health care and social assistance (-308; 9.3%).”
According to the CFIB’s Enterprise Pulse, Q3 2025:
- The number of self-employed has been growing over the past two years; the latest Q4 2025 count of 1,982,800 is just 1% below the peak of 2,003,400 reached in Q4 2019.
- The number of active businesses with employees has been rising steadily since 2021, hitting 938,790 in Q3 2025—a 4% increase over Q4 2019 levels. Growth has plateaued however, with the number remaining virtually unchanged since Q1 2024.
- Data on business entries and exits shows that Q1 2025 (the most recent quarter for which both entries and exits are available) marked a fifth straight quarter of negative net business creation—more businesses exited the market than entered. Even more concerning, the number of new entrants continues to fall sharply. The current entry rate of 4.9% (as a share of all active businesses) is flatlining at the lowest level outside the pandemic.
- The Q4 2025 number of insolvencies stands at 1,110 for all sectors combined, which represents a decrease from its peak of 2,003 insolvencies reached in Q1 2024 but it is still above its historical average.
More from Retail Insider:
