Unemployment And Insolvency Often Go Hand In Hand

The insolvency statistics for March have just been released and they are consistent with the trends for the previous few months. Generally filings are flat across the country except for those provinces affected by the decline in oil prices. Total filings in Canada for the 12 months ended March 31, 2016, were up only 2.8% and were basically flat in Ontario, Quebec and British Columbia.

For the same year over year comparison, filings in Alberta are up 27%, up 26% in Newfoundland and Labrador, up 20% in Saskatchewan and have also increased by 10% in Manitoba. On a month to month basis (though this is somewhat distorted due to February being a shorter month), filings in Newfoundland are up a whopping 46%.

This is consistent with the experience in the last few months where the provinces faced with declines in employment income due to the drop in oil prices are hardest hit and not surprisingly, have the largest increase in insolvency filings. Generally, Consumer Proposals are steadily increasing as a percentage of total filings whereas bankruptcies have been dropping as a percent such that the split is now almost 50 / 50. On a year over year basis this trend has continued, though it is interesting to note bankruptcy filings increased faster than proposal filings on a month over month basis in March. This may indicate a trend where more people have no choice but to file bankruptcies as their incomes have dropped to the point where they no longer have the income to file proposals – an option which might have been available when incomes were higher.