In the second quarter of this year, Canadian business starts fell by more than 49 percent compared to a year earlier and compared to the same quarter in 2019, according to the Equifax credit reporting agency.

The figure belies the optimism sold to the people by the government that as COVID vaccines spread and lockdowns were rolled back, the economy would rebound.

The wave of businesses reopening post-COVID lost its verve as this year’s second quarter began, Jeff Brown, chief of Equifax’s commercial solutions operations, told Yahoo.

Economic activity usually picks up in the second quarter as businesses gear up for the summer selling season, Brown noted.

However, in June this year, business openings fell by 11 percent compared to pre-COVID levels, Equifax found.

Automotive, construction, and manufacturing were hit hardest.

The decline prevailed across all of Canada, Craig Alexander, Deloitte’s chief economist, said in a Yahoo interview. 

New businesses typically make up most of the openings, with expansion of existing businesses also playing a part, Brown said.

However, inflation, rising interest rates, and sagging consumer spending have discouraged entrepreneurial activity this year.

Existing small businesses are struggling not only with economic headwinds, but most have not returned to pre-COVID sales revenues and many are toting debts taken on in order to survive the virus era, Brown explained.

The loss is concerning at all levels of the economy because small businesses buy much of their goods from larger firms, Brown added.

The drop in new businesses is an indicator of the Bank of Canada’s higher interest rates on the nation’s economy, Alexander said.

The falloff in new businesses comes as bankruptcies, debt levels, and late payments all are on the rise, Equifax noted.