‘Business appears to have anticipated the coming trouble’
Province
The financial health of many B.C. consumers continued to deteriorate in June as personal bankruptcies across the province surged 73.4 per cent from the same month a year earlier.
B.C. saw a total of 947 consumer bankruptcies filed in June, up from 546 in June 2008, the federal Office of the Superintendent of Bankruptcy said yesterday.
B.C. businesses fared better, with 47 business bankruptcies in June, up 42.4 per cent from a year earlier.
Across Canada, personal bankruptcies jumped 54.3 per cent in June compared with a year earlier. A total of 10,823 consumer bankruptcies were filed that month, up from 7,012 in June 2008, the superintendent of bankruptcy said.
For business, the hit was much lower, with 515 business bankruptcies in June, a 10.8-per-cent hike from the 465 of June 2008. But that doesn’t mean businesses escaped unscathed. June marked the first time since January that year-over-year business bankruptcies recorded an increase — May alone posted a 16.2-per-cent decrease compared with the previous year.
“Because Canada fell into recession a bit later than the U.S., Canadian business appears to have anticipated some of the coming trouble,” CIBC chief economist Avery Shenfeld said. “This does appear to be the first month where we are starting to see a bit of a year-over-year upturn. But still, it’s been very tame, actually.”
Sal Guatieri, senior economist with BMO Capital Markets, also saw the numbers as largely encouraging, calling Canadian business performance “remarkable.”
“It is a pretty sharp upward trend, but it’s not too surprising given what’s happened to the labour market,” Guatieri said. “The rate of business bankruptcy is still very low in Canada. That’s generally a reflection of much stronger balance sheets for businesses than households.
Total bankruptcies were up 51.6 per cent to 11,338 in June from 7,478 a year earlier. Retail, construction and manufacturing posted the most new bankruptcies.
“These numbers have been trending a bit higher than some past recessions given the heavy use of credit in the good times,” said Shenfeld. “I think the difference here is that the consumer sector took on a lot of debt prior to the recession and, with the sharp rise in unemployment, is having trouble paying for it.”
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