Business outlook has deteriorated, says Statistics Canada
The construction industry saw its pre-tax net profit decline by 11.1% due to rising costs.
The economic outlook for companies is deteriorated in the third quarter as interest rates began to have a cooling effect on the economy, Statistics Canada said on Wednesday.
In its quarterly report on business financial statistics released on Wednesday, the federal agency noted that the persistent labor shortage, the downward trend in energy and metal prices as well as the depreciation of the Canadian dollar against the US dollar have all contributed to heightened uncertainty and concerns about an economic slowdown.
Canadian corporations saw their seasonally adjusted net income before taxes decline 8.1% in the third quarter from the previous quarter, even though it increased year-over-year, Statistics Canada said. .
Pre-tax net income from oil and gas extraction fell 3.4% in the third quarter due to lower oil prices. x27;petrol during the quarter.
According to Statistics Canada, the construction industry was less profitable in the third quarter. It saw its pre-tax net profit decline by 11.1% due to rising costs, particularly those related to wages and materials.
Financial companies also saw their pre-tax net income fell by 11.6%.
This sector saw its provisions for credit losses increase by 151% in the third quarter due to unfavorable changes in the economic outlook , pointed out Statistics Canada.
However, net interest income increased by 4.8% due to higher Bank of Canada interest rates. Personal credit card loans also increased by 3%.
Amid rising food prices, companies in the food manufacturing, soft drink and ice cream have seen their average net profit margin increase from an average of 5.3% before 2020 to an average of 5.4% so far in 2022.
However, grocery stores have seen their average pre-tax profit margin fall from an average of 2.2% before 2020 to 3.5% so far in 2022 .
Statistics Canada attributed the increase in pre-tax net income of food stores to higher sales volumes and higher margins, although& #x27;she noted that this line of business has low margins compared to other non-financial sectors.