The Conference Board of Canada‘s Leading Indicator of Industry Profitability rose by just a modest 0.2 per cent, but it was still good enough for the largest gain since March 2011 and stands out after a year of sideways movement on the index.
According to the board, at 103.2 the index is now where it was back in October 2011. The report indicates modest economic growth at home and a myriad of risks related to events abroad have kept corporate profitability from gaining any ground over the past year, a trend it expects to continue for at least the next few months.
With challenging conditions in export markets, the board reports that the Canadian economy expanded at an unspectacular annual rate of 1.8 per cent in the second quarter of 2012. It’s the third consecutive quarter of growth below two per cent, a far cry from the three to four per cent annualized pace Canada enjoyed in the two years immediately following the recession.
Looking at the numbers by industry, the telecommunications industry’s profitability index fell for the third consecutive month to its lowest reading in over a year.
One of the worst performers, according to the report, is the computer and electronic product manufacturing industry, which saw its index fall in 10 of the past 12 months, leaving it at its lowest level in three years. The board points the finger of blame at Research in Motion.
“RIM’s share of the smartphone market continues to shrink rapidly due to fierce competition from the newest line of products introduced by Samsung and Apple,” said the report. “News that the new BlackBerry 10 operating system launch date is being delayed until 2013, missing the important back-to-school and Christmas retail seasons, is hitting the company’s near-term prospects, as well. In response to its difficulties, RIM has announced two rounds of job cuts that will see the company shed 7,000 jobs.”
