Alberta lost 3,500 businesses in the last 3 years

Last week, Statistics Canada released December 2021 data on business openings and closings in Canada, and I thought I’d explore the data.

In December 2021, there were 897,632 active businesses in Canada that reported having at least one employee that month. A year before, in December 2020, there were only 868,422. During that year, the number of active businesses in Canada grew by 29,210, or 3.36%.

Only one province, Newfoundland and Labrador, saw its number of active businesses shrink. They lost 96 business, dropping 0.77% from 12,508 to 12,508.

The province with the largest increase was Ontario, where they saw a 4.09% increase. They went from 333,936 active businesses to 347,590, an jump of 13,654./

Here are all the provinces in order of largest increase to the largest decrease:

	2020	2021	Change	% change
ON	333,936	347,590	13,654	4.09%
BC	146,497	152,083	5,586	3.81%
QC	190,456	197,155	6,699	3.52%
MB	27,459	28,247	788	2.87%
PEI	3,873	3,974	101	2.61%
NS	19,732	20,212	480	2.43%
SK	24,245	24,758	513	2.12%
NB	16,839	17,128	289	1.72%
AB	115,043	116,351	1,308	1.14%
NL	12,508	12,412	-96	-0.77%

And here it is in chart form, but in geographical order.

I found it interesting that of the 9 provinces that saw a net increase in the number of their active businesses in 2021, Alberta had the smallest increase.

And that made me wonder how Alberta has done over the last 3 years, you know, with the UCP implementing their so-called Job Creation Tax Cut. The party claimed that slashing taxes on corporate profits above half a million dollars—from 12% to 8%—would spur in an influx of new businesses.

So, I compared the number of active businesses in December 2021 with those in December 2018, the last December before the 2019 provincial election.

During that time, the number of active businesses dropped in Alberta. Plunging by nearly 3,500, from 119,795 in 2018 to 116,351 in 2021. That’s a 2.87% decline.

Now, of course, the pandemic had something to do with it. And since every province had the pandemic, too, they must have also seen a decrease over the last 3 years. Well, take a look.

	2018	2021	Change	% change
AB	119,795	116,351	-3,444	-2.87%
NL	13,421	12,412	-1,009	-7.52%
NB	17,317	17,128	-189	-1.09%
SK	24,814	24,758	-56	-0.23%
PEI	3,876	3,974	98	2.53%
NS	20,010	20,212	202	1.01%
MB	27,648	28,247	599	2.17%
ON	345,196	347,590	2,394	0.69%
BC	147,683	152,083	4,400	2.98%
QC	191,502	197,155	5,653	2.95%

The total number of active businesses lost was actually highest in Alberta. And even if you look at the percent change, Alberta still saw the second highest decrease, at nearly -3%.

6 of the 10 provinces saw an increase in the number of active businesses, with British Columbia, Québec, and Prince Edward Island having percentage-based growth similar to Alberta’s but in the opposite direction.

Here’s a look at Alberta’s monthly totals of active businesses over the last 3 years.

Sure enough, the pandemic had a big impact on the number of active businesses in the province. But there’s something else interesting in the graph.

In July 2019, the month the Job Creation Tax Cut took effect, Alberta lost 65 active businesses, compared to the month before. Not only that, but in every month but one between that time and the pandemic, the number of active businesses continued to decline.

Alberta went from 120,092 active businesses in June 2019 to 118,352 active businesses in February 2020, the last month before public health restrictions took effect. That’s a loss of 1,740 active businesses, or 1.47%. That works out to be an average loss of 217.5 active business per month.

That’s despite cutting the tax on corporate profits above $500,000. And again, that’s without the economic impact brought on by the pandemic.

Another thing that the graph shows is that while the number of active businesses rebounded after May 2020, that growth plateaued after January 2021, rising only 557 over the next 5 months, and then seeing a sudden jump of 472 in July, reaching a peak of 117,428.

Since last July, the number of active businesses continued that pre-pandemic decline, seeing a drop of 1,077 between July and December, and ending the year lower than it started.

Alberta went from 116,399 in January last year to 116,351 in December. Nearly all the growth seen in the first half of the year was completely wiped out.

And that drop during the last half of 2021 was not a national trend.

Here’s a look at the change in active businesses for all the provinces between July 2021 and December 2021.

	Jul 2021	Dec 2021	Change	% change
NS	19,861	20,212	351	1.77%
PEI	3,918	3,974	56	1.43%
ON	342,807	347,590	4,783	1.40%
QC	194,691	197,155	2,464	1.27%
NB	16,986	17,128	142	0.84%
MB	28,056	28,247	191	0.68%
BC	151,378	152,083	705	0.47%
SK	24,752	24,758	6	0.02%
NL	12,469	12,412	-57	-0.46%
AB	117,428	116,351	-1,077	-0.92%

And here is the same information in chart form. First, the total change in active businesses.

Then the % change in active businesses.

Alberta was one of only two provinces that saw a decrease in active businesses during the last half of 2021. Not only did we see the largest decrease in absolute numbers, but it was the largest relative decrease, too, nearly 1%.

I’m starting to wonder whether the corporate tax cut will attract businesses at all.