Conference Board warns of declining Canadian profits as trade falters

The Conference Board of Canada says profit at Canadian companies is likely to decline for the rest of the year and into the first quarter of next as a greater number of industries and sectors feel the pinch from the worsening global trade picture.

The Conference Board’s leading indicator of industry profitability declined for the sixth month in September, dropping 0.35 percentage point. The slowdown has also spread to a greater number of industries, with 22 out of 49 industries reporting a decline.

That compares with about 10 to 12 industries posting a drop in April to July, the think tank said.

Industries from mining to telecommunications all reported a decline in their profitability index in the past few months, with transportation and warehousing services and real estate showing the biggest drops.

 “Several of the factors hurting the profits outlook are linked to international trade,” the board report shows. “As a result, industries that export a large share of their production (mostly primary and manufacturing industries) continue to struggle.”

The U.S. Federal Reserve is expected to begin printing cash soon to prop up the faltering recovery south of the border, home to about three quarters of Canada’s trade. The Canadian government has warned that uncertainty about the outlook overseas, with many European nations also struggling to reduce debt, will spillover here.

Compared with six months ago, the real estate profits index has declined 3.9%, the report said.