The weight of weakened oil prices and the Fort McMurray wildfires have dragged down profits realized by Canadian corporates this year. This has been written on extensively, but one commentary takes a more nuanced look at the situation.
In a piece titled Canada: Excluding energy, non-financial profits stay resilient
, National Bank Senior Economist Marc Pinsonneault reports that while energy companies and financial companies have taken a beating, companies outside those groups have so far managed to withstand the blows.
“Operating profits of ex-energy non-financial companies have been resilient over the last ten quarters, slightly hovering around a quarterly level of $55 billion,” says Pinsonneault.
He attributes the resilience to increased earnings in manufacturing (except for petroleum and coal products), transportation and warehousing, retail, and wholesale trade. These buoyant forces, he says, more than compensate for losses in public utilities and in professional, scientific, and technical services.
“The improvement in manufacturing profits over the period was mostly felt in the motor vehicle and parts and in other transportation equipment industries,” he says.
The positive performance of the manufacturing and auto industry sectors is consistent with predictions made by respondents in a Business Outlook Survey, which was conducted by the Bank of Canada and published in early July.
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