Canadian Manufacturing

Entrepreneurial activity stuck near recession lows, BDC study finds

Slightly over 43,000 Canadians started a new business that hired employees in 2011

MONTREAL—New entrepreneurial activity in Canada is still barely above the worst levels seen during the recession, according to a new study by the Business Development Bank of Canada (BDC).

Slightly over 43,000 Canadians started a new business that hired employees in 2011—0.23 per cent of the almost 19-million-strong Canadian workforce.

The BDC says that’s only a slight increase from the 2009 recession low-point of 0.22 per cent, which the BDC says is indicative of a collective reluctance to start a new business.

“This study is important because it gives us our first health check-up for Canadian entrepreneurship,” BDC vice-president of research and chief economist Pierre Cléroux said in a statement. “The slow economic recovery appears to have discouraged risk-taking on new business ventures.”

Regionally, British Columbia, Quebec and Ontario have seen the country’s best recovery in entrepreneurship, with 2011 levels of 0.27 per cent, 0.23 per cent and 0.22 per cent, respectively.

The Prairies and Atlantic provinces are still struggling to reverse their declines in new entrepreneurial activity, according to the study, with an index for the Prairies of 0.22 per cent—an all-time low.

In the Atlantic region, the index was 0.23 per cent in 2011, which the BDC says is tied with the region’s previous all-time worst year in 2007.

Entrepreneurship has started to recover in three of the six industry sectors studied, the study found, with recoveries in trade (0.21 per cent in 2011); health care and social assistance (0.24 per cent in 2011); and professional services (0.38 per cent in 2011).

Construction, the sector with the highest rate of entrepreneurship, has yet to rebound, though there are signs the decline may be over.

The sector had an index of 0.49 per cent in 2010 and 2011, down from 0.62 per cent in 2008.

The study is the first to use BDC’s newly created Index of New Entrepreneurial Activity, which measures the rate at which Canadians are launching new job-creating business ventures across the country.

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