DAILY NEWS Jan 16, 2014 10:27 AM - 0 comments

Industrial profitability outlook improved considerably in December

The energy extraction sectors posted the strongest gains to end the year.

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Ottawa – The outlook for Canadian industrial profitability improved considerably in December 2013, as the Leading Indicator of Industrial Profitability posted its fourth consecutive monthly increase.

The Conference Board of Canada index rose 0.4% in December to close 2013 at 106.7. Since December 2012, the index is up a full 1%.

Of the 49 industries tracked by the index, 34 industries posted monthly gains and 38 showing a positive fourth quarter. December also continued the trend of broad-based improvements at the industrial level, with a large proportion of manufacturing, retail, services, and goods-producing sectors posting increases.

The index was supported by lower interest rates in Canada and a lower Canadian dollar. The fall in the five-year mortgage rate improved the outlook for residential construction, and the residential construction index increased by 0.2% after a three-month slide.

The lower dollar will support export sectors by improving their pricing advantage against US producers.

The short-term outlook for the automotive sectors improved on the lower Canadian dollar, with the vehicle manufacturing and vehicle parts manufacturing indexes both increasing significantly in November and December.

The energy extraction sectors posted the strongest gains to end the year, with oil extraction increasing by 3.2% in December and gas extraction up 2.7%. Both sectors improved thanks to large jumps in energy prices. The natural gas sector was also boosted by a cold start to the winter, which pushed gas prices higher.

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