Canadian corporate profits rise in Q4, reinforces solid economic picture

Canadian corporate profits were up again in the fourth quarter of 2016, extending the second quarterly gain after the streak of falling profits during late 2015/early 2016. The fairly widespread gains in corporate profitability reinforce the solid economic picture that has developed for the final quarter of 2016.

Canadian corporations earned $86.8 billion in operating profits in the fourth quarter, up 3.6 percent from the previous quarter. The operating profits in the non-financial and the financial industries were both up by $1.5 billion. Overall, operating profits for Canadian corporations rose 13.2 percent compared with the fourth quarter of 2015.

The non-financial industries also saw widespread gains. Operating profits in the non-financial industries increased 2.6 percent from the third quarter to $58.7 billion in the fourth quarter on a $7.5 billion increase in operating revenues. 14 of the 17 major industries showed increased profitability in the fourth quarter. Operating profits for Canadian non-financial corporations increased 11.9 percent compared with the fourth quarter of 2015.

"Profit growth is likely to remain positive moving forward, reflecting a Canadian economy due to turn in a solid economic performance this year and next.  While an uptick in U.S. growth should support Canadian output and thus profits, a thickening of the border, or an uncertainty-led slowdown in demand would weigh on corporate profitability." said TD Economics in a report.