Canada’s corporate profits rose 7.4 per cent to $88.6 billion in the first quarter of 2014. Statistics Canada reports that operating profits were up in thirteen of the twenty-two industries it tracks. Measured on a year-over-year basis, corporate profits were up 12.3 per cent. Before this quarter, profits had been falling throughout 2013, prompting economists to refer to a “slump,” with profits 16 per cent below pre-recession levels.
Profits were higher in the non-financial sector, thanks mainly to the oil and gas sector, including support acitivities, where commodity prices for crude energy products were the highest in five years. Profits in this sector were up 47 per cent.
In manufacturing, seven of thirteen industries reported gains. Profits rose sharply, up 24.3 per cent, to $14.7 billion. Again, the largest gain in manufacturing was in the petroleum and coal industry. Shipments of these products reached their highest level in nearly six years.
Wholesalers saw profits grow 6.1 per cent to $7.9 billion. Building material and supplies wholesalers rebounded from their worst operating profit level in four years as profits rose 56.4 per cent to $953 million, marking the largest increase in the sector.
Retailers, on the other hand, saw profits drop slightly, down 0.5 per cent to $4.2 billion. Gains in motor vehicle and parts dealers, and furniture, home furnishings, electronics and appliance stores, were nearly offset by declines in food and beverage stores, as well as decreases in clothing, department and other general merchandise stores.
In the financial sector, operating profits rose 2.5 per cent to $23.0 billion. Most of the increase came from the depository credit intermediation industry. Insurance carriers, however, saw a large decline in operating profits, falling 20.4 per cent to $3.1 billion. In the life, health and medical insurance industry, the drop was even sharper, at 36 per cent.
Meanwhile, Statistics Canada data show that Canada’s corporations had more than $626 billion in cash on hand as of the end of 2013, prompting calls for companies to spend more on wages, employee training and research and development. This massive accumulation of wealth, referred to by the International Monetary Fund as “dead money,” coincides with a rise in the number of minimum wage and part-time jobs in Canada.
But Jayson Myers, head of Canadian Manufacturers and Exporters, told the Financial Post that, optics notwithstanding, investment levels among manufacturing industries are “at an all-time high and going up right across Canadian industry.”