Canada’s private-sector business environment is worse than headline data suggests. Statistics Canada (StatCan) data shows active businesses were little changed in July, but a closer look reveals the economy has seen big changes. Active business growth is increasingly concentrated in sectors dependent on public spending. The headline data has obscured reality, masking a sharp erosion in the broader business environment.
Canadian Business Growth Flat—Until Public Spending Is Excluded
Canadian businesses showed relatively flat movement in the latest data. There were ~938,500 active businesses in July, virtually flat from a month prior and a year before. The opening and closing rate both came in at 5.0%, with businesses closing and opening at the fastest rate since December 2024. However, excluding publicly funded sectors reveals that private industry is doing much worse.
StatCan provides a little-known supplement that excludes education, health care, and social services (EHS). The grouping isn’t a coincidence—those industries are non-market, and primarily funded by public and charitable contributions. If the goal is to understand the current business environment, excluding the trio isolates the noise from government service expansion.
Canada’s Private-Sector Shrinks To Smallest Share of Businesses On Record
The share of Canadian active businesses excluding education, health care, and social services (EHS), %.
Source: Statistics Canada; Better Dwelling.
Excluding EHS, Canada had ~817,700 active businesses in July—flat from June but down 0.3% (-2,500) year-over-year. This isn’t just the fewest active businesses since April 2023—the count represented just 87.1% of the headline total. Private business is the smallest share in StatCan’s available data, which goes back to 2015.
Over the past year, Canada’s headline business count shows net growth of ~600 active businesses in July. EHS accounted for ~3,100 of those businesses—displacing, rather than contributing to private-sector growth. The result: headline business growth now depends on publicly funded sectors rather than a broad-based expansion.
Canadian Private Sector Business Closures Outpace Openings
Canadian active business openings vs closures, ex-EHS. Rolling 12-month sum, in thousands.
Source: Statistics Canada.
Canada’s problem facilitating active businesses ex-EHS is also worsening. The segment saw ~42,000 businesses open in July, up 4.9% from a month prior and up 6.8% from last year. In contrast, the segment saw ~43,400 closures in July, up 8.5% in the month and 12.4% from last year. The pace of closures is growing at roughly twice the rate of openings.
The shift has become a clear trend. In the 12 months ending in July 2025, there were ~499,300 active business closures—about 0.75% more than openings. The rolling 12-month sum of closures has outpaced openings since November 2024.
Headline data for active businesses already painted a picture of a slowing economy, but stripping government-adjacent businesses reveals the private sector is being hit even harder. While trade tensions have added pressure, the weakness began earlier, pointing to deeper issues with consumption or competitiveness. As a result, the problem is unlikely to disappear even when trade tensions ease.