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40 of 49 industries optimistic about outlook for profitability

Ottawa - The short-term profitability outlook continued to improve in September 2014, with the Leading Indicator of Industry Profitability increasing to 107.9, up from a revised 107.7 in August. The top-line index overcame weaker commodity...


Ottawa – The short-term profitability outlook continued to improve in September 2014, with the Leading Indicator of Industry Profitability increasing to 107.9, up from a revised 107.7 in August. The top-line index overcame weaker commodity prices and a correction in the Toronto equity market to increase for the eighth consecutive month and 12 of the past 13 months. The index is compiled by the Conference Board of Canada.

The individual industry indexes also performed well, with only nine of the 49 industries tracked seeing a decline in their profit outlook. Furthermore, only seven industries have posted a decline over the past year, suggesting that the improving profit outlook has become more entrenched.

Declining energy prices pushed the oil and gas extraction indexes lower in September, continuing a trend of weaker profit outlooks for the energy sector that started at the beginning of the third quarter. While weaker energy prices have hurt the outlook for the energy industries, they have also helped to reduce input costs for the manufacturing sector. That, combined with the weaker Canadian dollar, have improved the short-term profit outlook for 14 of the 17 manufacturing industries tracked in the index.

While the overall outlook for the manufacturing sector was strong over the third quarter, it was the Canadian auto industries that set the pace. The motor vehicle and motor vehicle parts manufacturing industry indexes had a strong quarter on higher shipments and declining inventories, thanks to strong domestic and US auto sales. The better profit outlook for the sector is reflected in Ford Canada’s decision to add 1,000 jobs at its plant in Oakville, ON.