CIBC: Business bankruptcies at record low

According to a report by CIBC, corporate Canada has never been more stronger.

In their latest bankruptcy report, CIBC states that just over 3,500 firms declared bankruptcy during the first 10 months of 2010.

That’s 26% below the rate in the same period of last year and less than half the average level of the past twenty years. The 3.4 bankruptcies per 1,000 businesses in 2010 was the lowest number on record.

“Better-than-expected profitability and a reluctance to spend in recent years has left Canadian businesses sitting on a record amount of cash and confident about the future. Corporate Canada’s decision to quickly downsize during the recent recession not only allowed it to withstand the downturn but has also allowed it to ramp up its hiring at a much faster clip than we’ve seen stateside,” said Benjamin Tal, Deputy Chief Economist at CIBC.

All provinces have seen the number of business bankruptcies fall over the year ending October 2010 with British Columbia leading the way with 43% fewer bankruptcies than during the same period in the previous year. Ontario, Manitoba and Saskatchewan also saw business bankruptcies decline more than the national average.

Change in Business Bankruptcies By Province (Nov 09-Oct 10 vs. Nov 08-Oct 09)

Recently, Statistics Canada revealed Canada is 30,000 jobs short of the pre-recession peak. At the current rate of job creation it will take no more than a few months to completely close the gap.

In the U.S., with the level of employment no less than 5.5% below the prerecession level, it will take 55 months to return to pre-recession levels at the current pace of job creation.

CIBC’s report notes that the ability of Canadian firms to stay in business during the recession was, in part, a result of some well-timed defensive steps taken by its business leaders.