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The number of operating businesses in Canada declined last year — signalling likely weakness in the labour market, suggests a new report from National Bank Financial Inc. (NBF).

According to new data from Statistics Canada, the population of active businesses dropped by 0.2% in 2023, as the number of businesses that shut their doors in December hit a multi-year high, and relatively few new ventures arose to take their place.

The overall decline in the number of active businesses for the year was the first drop since 2017, apart from a blip during the recession that accompanied the pandemic, NBF noted.

“Back then, however, the bulk of the weakness was concentrated in energy-producing provinces. This was not the case in December,” NBF said.

Indeed, eight out of 10 provinces reported an annual decline in the number of active businesses, it noted.

“Given the current level of interest rates, the situation is unlikely to improve in the coming months. That’s why we see Canada’s unemployment rate near 7% by the end of the year,” it said.