Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Insolvencies rose 8.8% m-o-m on a seasonally-adjusted basis (SA) in September, reversing the decline seen in August. While the data has been quite volatile over the past year, even on a seasonally-adjusted basis, insolvencies are reaching levels not seen since the Global Financial Crisis in 2009.
The consumer insolvency rate (insolvencies per 1,000 population) edged higher in September and remains slightly lower than it was on the eve of the pandemic, thanks to the strong population growth over the period. (see Fig 6). However, the level of proposals (ie renegotiation of terms) is above pre-COVID levels, while bankruptcy levels remain well below. We also note that the total levels of insolvencies in BC, Manitoba, Ontario, Alberta, and Saskatchewan are above the levels seen in 2019; all these provinces have higher-than-average levels of debt-to-disposable income (see Fig. 7). Similarly, these provinces have seen some of the biggest rises in insolvency rate compared to pre-Covid.
Business insolvencies increased in September on a seasonally-adjusted basis, but remain lower than last year (see Fig. 8). We also note that the business bankruptcies have been relatively stable in 2025, putting an end to the declining trend that was seen since the surge in January 2024, following the CEBA loan repayment deadline (Fig 9).
Elevated household debt, reduced purchasing power due to the recent inflationary episode, and high interest rates have put pressure on households’ finances in recent years. Nevertheless, the deterioration in insolvencies has been relatively modest this year, likely due to the decline in interest rates since the second half of 2024. The labour market’s resilience, where the number of layoffs remains low, is also playing a crucial role in this, allowing borrowers to weather various shocks by adjusting their lending to mitigate the impact of higher interest rates on their regular payments.
Easing uncertainty, improving sentiment, and the resilience of the labour market suggest the economy is no longer deteriorating. Nevertheless, a prolonged period of tepid growth should be expected. Significant job losses remain the main risk to the outlook. As we have pointed to at numerous occasions, a deterioration in labour market conditions, especially job losses, and the associated decline in income would likely lead to a jump higher in insolvencies and could have some significantly negative consequences on the economy (see It’s a “Me-cession”, not a recession and Will it be a hard landing or a soft landing? The labour market will decide). .
In Alberta, insolvencies rose in September, and the consumer insolvency rate remains one of the highest amongst provinces. Nevertheless, there seems to be a stabilization in insolvencies and the share of bankruptcies in total insolvencies is the lowest amongst provinces. Albertan households have some of the highest debt-to-income ratios, making them vulnerable to rising interest rates and income losses. They have also seen a bigger decline in their purchasing power than other provinces due to underperforming wages and income gains (see Why are Albertans so grumpy? It’s about falling behind economically). This makes Albertans particularly vulnerable to job losses.
Insolvencies rose 8.8% m-o-m in September on a seasonally-adjusted basis, reversing an 8.3% m-o-m drop in August. Insolvencies have been quite volatile over the past year, even on a seasonally-adjusted basis. Insolvencies, which include both bankruptcies and proposals (a renegotiation of terms), are 9.9% higher compared to the same month last year. This resulted from a 15.7% year-over-year (y-o-y) rise in bankruptcies and an 8.2% year-over-year (y-o-y) rise in proposals. It’s important to note that proposals account for approximately 76% of total insolvencies.
Compared to last year, insolvencies are higher in most provinces, except in Nova Scotia (-2.5% y-o-y) and Alberta (-2.3% y-o-y). Insolvencies increased the most in BC (+38.3%), Newfoundland (+17.7% y-o-y), Manitoba (+16.8% y-o-y), and New Brunswick (+16.6% y-o-y). The rose the least in Ontario (+7.4% y-o-y), Quebec (+9.9% y-o-y), and Saskatchewan (+12.9% y-o-y)
On a monthly basis, insolvencies jumped by 8.8% m-o-m seasonally-adjusted (sa) in September. The details show an increase in proposals (+7.5%) and in bankruptcies (+13.3% m-o-m). At the provincial level, insolvencies rose in every province, except in PEI (-27.6% m-o-m). They increased the most in Saskatchewan (+31.7% m-o-m), Newfoundland (22.5% m-o-m), New Brunswick (+19.7% m-o-m), and Quebec (+12.1% m-o-m).
Relative to 2019, insolvencies in Canada are currently 10.9% higher, with proposals being 41% above their 2019 levels, while bankruptcies are 35% below. We note that the level of insolvencies is significantly higher compared to pre-COVID in BC (+50.6%), Manitoba (+37.1%), Ontario (+26.6%), Alberta (+16.6%), and Saskatchewan (+15.1%). The level of insolvencies is still well below pre-pandemic levels in Nova Scotia (-30.5%), PEI (-22.7%), New Brunswick (-20.1%), Newfoundland (-17.2%), and Quebec (-10.2%).
The consumer insolvency rate (number of insolvencies per 1000 people aged 15 and over) rose to 0.362 in September. The insolvency rate is the highest in Newfoundland (0.476), New Brunswick (0.454), Quebec (0.411), and Alberta (0.395). It is the lowest in BC (0.290), PEI (0.304), Manitoba (0.308) and Ontario (0.341).
Compared to 2019, the insolvency rate is slightly lower nationally (-0.012). It is higher than in 2019 only in BC (+0.069), Manitoba (+0.057), and Ontario (0.030). It has eased the most in Nova Scotia (-0.240), PEI (-0.182), New Brunswick (-0.177), and Newfoundland (-0.122).
Business insolvencies rose 12.9% m-o-m seasonally-adjusted in September, reversing the decline seen in August, and are 9.4% lower than last year. The decrease in business insolvencies over the past year, representing less than 5% of total insolvencies, is due to a decline in bankruptcies (-9.0% y-o-y), and in proposals (-10.6% y-o-y). Bankruptcies represent about 76% of business insolvencies.
The increase in business insolvencies on a monthly basis at the national level, was mainly the result of higher insolvencies in Ontario and Quebec, while they decreased slightly in Alberta and BC. The decline on a y-o-y basis was mainly due to lower insolvencies in Ontario and Quebec, partly offset by higher insolvencies in Alberta.
By industrial sectors, the detail shows many industries with lower insolvencies compared to September last year, led by manufacturing, construction, accommodation and food services, and other services. These declines were partly offset by increasing insolvencies in retail trade, and professional, scientific and technical services.
Compared to pre-pandemic levels, business insolvencies in Canada are 41% higher, with PEI (+177%), BC (+99.7%), Alberta (+85.6%), and Ontario (+78.5%) having seen the biggest increases.
In Alberta, insolvencies barely increased m-o-m sa. in September (+0.1% m-o-m) and were 2.3% lower compared to the same month last year. Over the past 12 months, there have been 19.4k insolvencies. On a seasonally-adjusted basis, the almost unchanged insolvencies in September came from an increase in bankruptcies (+4.1% m-o-m sa), while proposals declined (-1.5% m-o-m sa). Bankruptcies account for about 14% of insolvencies in Alberta, the lowest proportion of all provinces. We note that the level of proposals is currently about 50% above its pre-pandemic level, while bankruptcies are 50% below pre-COVID. On the consumer side, the insolvency rate was unchanged at 0.395, slightly lower than pre-pandemic. On the business side, insolvencies are 85.6% higher than in September of last year, with a 150% y-o-y increase in bankruptcies and 42% y-o-y rise in proposals.
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Independent Opinion
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