Profits expected to grow in Canadian manufacturing sector
Profits are expected to grow in Canada’s manufacturing sector, despite the drag on exports caused by a strong loonie, according to a report released Wednesday.
The Conference Board of Canada examined several different industries in association with the Business Development Bank of Canada. Those include electrical equipment, fabricated metals, and machinery, among others.
"The reasons for optimism in these industries include a rebound in demand in the construction and broader manufacturing sectors, as well as a revival in American, European and Asian export markets," said Michael Burt, associate director of industrial economic trends with the Conference Board.
On the downside, says the Ottawa-based economic forecaster, the strong Canadian dollar threatens industries that depend on exports for growth.
Profits in the electrical equipment manufacturing industry are expected to more than quadruple this year to $223 million — still well below their pre-recession peak of $577 million in 2007. Rising non-residential construction activity and strong telecom investments are to thank for the predicted growth.
In fabricated metals, profitability is expected to grow 6.9 per cent to $1.4 billion in 2011 on the back of strong metal prices and rising investment in the energy industry.
The report predicts a 40 per cent increase in profits for the machinery manufacturing industry to $920 million, thanks largely to investment in the natural resources sector.