An uncertain economic environment will restrain growth in Canadian industries that rely on consumer willingness to open their wallets, according to the Canadian Industrial Profile-Autumn 2011. Published by the Conference Board of Canada in association with the Business Development Bank of Canada (BDC), the Canadian Industrial Profile provides a five-year (2011-2015) production, revenue, cost and profitability forecast for six industries in each quarter.
"Several industries profiled in this outlook have recovered from the 2008-2009 recession. But the prospects for continued growth are muted because of weak consumer and business confidence, as well as high household debt levels," said Michael Burt, Associate Director, Industrial Economic Trends.
Higher industry prices are largely responsible for a 15 percent increase in profitability among food manufacturers this year. However, cost pressures -- including the effects of higher agricultural and energy prices -- are expected to limit profit growth through 2015. Nevertheless, the industry's fundamentals remain sound, supported by population and income growth in the medium term.
Several factors will lead to slower retail sales growth and a decline in profitability this year. In particular, Canadians are expected to delay big-ticket and discretionary purchases until their personal and household finances improve. Industry profits are forecast to climb back above $12 billion in 2012 (offsetting most of the decline this year) and post steady growth in sales, revenues and profitability thereafter.
Rising labour and operating costs will lower profits in transportation and warehousing to less than $5 billion this year. While the industry as a whole has recovered from the recession, the rebound varies among the different modes of transport. The trucking, air transportation and rail segments have posted strong growth, and the pipeline transportation segment is forecast to record its first increase in output in five years. However, the ongoing economic weakness in the United States is limiting demand for water transporation services.