The monthly Leading Indicator of Industry Profitability is constructed from high frequency data series. The indicators are designed to be predictive of movements in corporate profitability six months hence. An industry leading index is created for the economy as a whole, as well as for 49 individual sectors within the economy, thus providing coverage for most of the private business activity that takes place in Canada.
Document Highlights
With Canada’s economy slowing down, 30 of the 49 industries included in Signal49 Research’s Leading Indicator of Industry Profitability registered a decrease in their index values in March, up from 20 in February.
High levels of household debt are weighing on consumer spending. This fact, combined with a softening of the housing market and lingering weakness in Canada’s energy sector, has had broadly negative impacts on the profitability outlook for many industries.
Despite the near-term negativity, there are some positive signals, such as a strong equity markets and increasing employment, and an expectation that non-energy investment will pick up later this year. Thus, the weak profitability outlook might be short-lived.
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