ICBA EconoBot | Canada's Entrepreneurial Drought: Six Quarters of Business Closures Outpacing Openings

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TOP STORY

Canada’s Entrepreneurial Drought: More Businesses Closing Than Opening for Six Straight Quarters

The Canadian Federation of Independent Business released a damning new report yesterday: more businesses have closed than opened in Canada for six consecutive quarters — a sustained “entrepreneurial drought” not seen outside the pandemic. Exit rates hit 5.6% in Q2 2025 while entry rates fell to 4.8% in Q4, and 55% of small business owners say they would not recommend starting a business right now. The culprits are familiar to anyone in construction: high costs, tax and payroll pressures, red tape, labour shortages, and unrelenting uncertainty. CFIB’s full report shows the overall trend of business creation has been declining since the mid-1980s, but openings had at least outpaced closures — until now. Two-thirds of small firms feel unsupported by their provincial governments, and 73% lack confidence in Ottawa. As CFIB put it: governments need to stop papering over the cracks and refocus on policies that actually improve the small business environment. Part 2 with policy recommendations drops April 28.

THE NUMBERS — STATISTICS CANADA

Manufacturing Sales, February 2026 — Sales rose 3.6% to $71.2 billion, rebounding from January’s 3.1% drop. Transportation equipment surged 18.8% as auto plants restarted after retooling shutdowns. Primary metals hit a new record at $6.5 billion (+4.9%) — watch for tariff-driven price effects baked into that number. Unfilled orders also reached a record $117.6 billion. Statistics Canada

Wholesale Trade, February 2026 — Wholesale sales rose 2.0% to $86.8 billion, with motor vehicles and parts leading the way (+6.1%). The inventory-to-sales ratio dropped from 1.60 to 1.56, suggesting supply chains are tightening slightly as businesses move product ahead of anticipated tariff disruptions. Statistics Canada

National Input-Output Tables, 2024 — New tables for 2024 released alongside revisions to 2022 and 2023. These provide the most complete picture yet of inter-industry flows in the Canadian economy — useful for anyone tracking construction’s upstream supply chain dependencies. Statistics Canada

FROM THE ECONOMISTS

Charles Lammam — How Canada’s Economy Is Choking from Federal Regulations: 7 Graphs — Writing for The Hub, Lammam marshals the data on Canada’s regulatory burden: dead last among 25 OECD peers on business location rules (land, permits, property transfers), 33rd of 101 countries on the World Bank’s regulatory framework metric, and a 37% rise in federal regulatory restrictions between 2006 and 2021. Construction permits take roughly 250 days in Canada — three times the U.S. average. The Business Council of Alberta’s new From Barriers to Breakthroughs roadmap calls it the single largest barrier to investment in the country. A must-read for anyone wondering why projects don’t get built.

WORTH WATCHING

Iran Ceasefire Expiry — April 22 — The two-week U.S.–Iran truce is wobbling after direct talks ended without agreement. TD Economics warns a structural supply shortfall of 7–10% of global production keeps oil balances tight, with Brent retesting US$120/bbl if the truce collapses. For BC and Alberta contractors, diesel, asphalt, and transportation costs remain sharply above pre-war levels.

CMHC Housing Starts (March) — Released tomorrow (April 17) at 8:15 AM ET. February’s SAAR was 250,900 units, up 4.5% from January. With ConstructConnect forecasting a 5% decline in residential starts for 2026, March data will test whether the early-year rebound has legs.

CPI (March) — April 20 — February headline inflation eased to 1.8%. March will capture the first full month of Iran-war energy price spikes, likely pushing CPI higher and further sidelining any BoC rate cut hopes ahead of the April 29 decision.

IN BRIEF

CMHC — A new CMHC study finds housing construction labour productivity has fallen 2.1% per year over two decades — a cumulative 37.3% decline. Small firms (under 20 employees) account for the bulk of the drop. Ontario drove more than half the national decline — the only province where no firm size segment improved. B.C. made a positive contribution nationally, but only because its share of construction activity grew, not because firms got more efficient.