Insolvency Statistics in Canada — 2018
Volume of insolvencies in Canada during 2018
In 2018, a total of 128,846 insolvencies were filed with the Office of the Superintendent of Bankruptcy (OSB), representing a 2.4% increase from the previous year. The number of consumer insolvency filings rose 2.5% (125,266 filings), while the number of business insolvency filings fell 0.8% to 3,580. At the same time, there was widespread growth in the number of consumers who opted to file a proposal, bringing this number to new heights in 2018. Thus, the share of proposals among consumer insolvency filings, accounting for 52.6% in 2017, grew by 6.6% in 2018 to reach a record level of 56%.
It is useful to note the economic context which led to the insolvency filings in 2018. In recent years, the Canadian economy grew close to its potential. We note that the unemployment rate was at its lowest in 40 years. In 2017, the Canadian economy grew by 3% while maintaining positive growth throughout the first three quarters of 2018. While the average national unemployment rate stood at 6.3% in 2017, before continuing its decline to an average of 5.8% in the first half of 2018, participation rates remained stable at an average of 65.6%. Throughout 2017 and 2018, Canadian household debt continued to rise and remained very high. According to Statistics Canada data, between the first quarter of 2017 and the second quarter of 2018, the household debt to disposable income ratioFootnote 1 hovered at around 172%. As well, between July 2017 and July 2018, the Bank of Canada increased its key interest rateFootnote 2 from 0.5% to 1.5%.
Demographics at a glance
While the share of insolvency filings by consumers aged 45 to 54 declined by 1%, from 23.4% in 2017 to 22.4% in 2018, consumers aged 65 and over saw their share in insolvency files increase by 0.7%, from 11.2% in 2017 to 11.9% in 2018. Shares in insolvency filings by other age groups in 2018 remained relatively stable compared to 2017. For their part, women’s share of total insolvency filings increased by 0.3% in 2018 to 47.3%.
Canada, like many other developed countries, has for some time been undergoing a demographic transition that is affecting the age distribution of the growing population. Between 2008 and 2018, while the overall population increased by 11.5%, the number of people aged 65 and over increased by 40.0%, that of people aged between 45 and 54 decreased by 5.7% and that of people aged 14 and less increased by 6.3%. Statistics Canada predicts that between 2015 and 2035, there will be more seniors in the Canadian population than people under the age of 14.
Regions at a glance
The three provinces most affected by the growth in consumer insolvency filings in 2018 were: Alberta, with an absolute increase of 1,269 filings (9.5%), followed by Ontario with 689 filings (1.8%), and Newfoundland and Labrador with 323 filings (12.4%). Along the same lines, the most affected economic regions were: Calgary, with an absolute increase of 501 insolvency filings (10%), followed by Edmonton with 411 (9%), and Avalon-Peninsula with 229 (16.5%). On the business side in 2018, Ontario businesses were the most affected, with an increase in absolute value of 59 insolvency filings (6.7%), followed by Quebec with 34 insolvencies (1.6%), and Alberta with 11 (5.6%).
Significant regional disparities have been observed in the economy. For example, between 2017 and 2018, the unemployment rate was, on average, very high in the Maritime Provinces, relatively high in the Prairie Provinces, relatively low in Quebec and Ontario, and very low in British Columbia. In fact, according to Statistics Canada data, while British Columbia had an unemployment rate ranging from 5.1% in 2017 to 4.7% in 2018, the average unemployment rate in Newfoundland and Labrador was 14.7% and 13.9% respectively for those two years. As for the employment rate, between 2017 and 2018, it fluctuated around 65% in the Prairie Provinces, 62% in British Columbia, 61% in Quebec and Ontario, and 56% in the Maritime Provinces. While the regional real GDP growth rate stood at about 2.0% in most parts of the country in 2018, provinces like Nova Scotia, New Brunswick, Saskatchewan, and Newfoundland and Labrador experienced a growth rate that varied from 1.0% to -1.0%Footnote 3.
Industry at a glance
The total number of business insolvencies decreased slightly, from 3,609 in 2017 to 3,580 in 2018. However, the slight decrease seen in 2018 does not come as a surprise given that the volume of business insolvencies has been in a free fall since 2001. That year, businesses had filed a total of 12,248 cases. In fact, the sectors that experienced the largest declines in absolute value of insolvencies were manufacturing (-46 cases), mining and oil and gas extraction (-23 cases), as well as wholesale trade (-15 cases). For its part, the construction sector experienced the greatest growth in absolute value (+63), followed by far by the real estate and rental and leasing sector (+13).
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