Many Canadians are still labouring under significant fiscal volatility
Canadian consumer insolvency levels dropped by 11.3% month over month in July, remaining below pre-pandemic levels, according to data from the Office of the Superintendent of Bankruptcy.
Over the 12-month period ending July 31, the number of Canadians who filed for insolvency dropped by 22.6%.
“The fourth wave and the resulting extension of income support for workers out of a job have extended the low consumer insolvency rates we have seen over the course of the pandemic,” said André Bolduc, executive board member of the Canadian Association of Insolvency and Restructuring Professionals.
However, Bolduc said that these readings should not be taken as wholly positive sign, as these levels are “likely masking some of the financial struggles that are just below the surface for many Canadians – those whose income has been heavily impacted due to COVID-19 and have had to supplement that income with government aid or credit.”
Read more: Canadian insolvency rate reaches peak in Q2 2021
By region, Atlantic Canada saw the most significant monthly declines in consumer insolvencies in July, with Prince Edward Island posting a 30% drop, followed by Newfoundland and Labrador at 28.7%, and New Brunswick at 27.9%.
Double-digit decreases in consumer filings were also observed in Manitoba (-26.2%), Nova Scotia (-13.9%), British Columbia (-11.9%), and Ontario (-11.2%).
On the other hand, business insolvencies reached a record low with a 28.3% drop in July. This was the largest month-over-month decrease ever since the pandemic took hold early last year. The annual decline was a similarly large 21.2%.
“Government support has bridged the revenue gap for many businesses impacted by pandemic-related restrictions and will likely continue to do so at least until those extensions come to an end in October,” said Mark Rosen, chair of CAIRP. “If businesses aren’t able to ramp back up to near pre-pandemic levels by then, we will see the number of insolvency filings begin to climb.”
