The combination of higher interest rates, inflationary pressures, and labour challenges have impacted Canadian enterprises in several different ways. Collectively these macroeconomic headwinds drove down net income before taxes (NIBT) in the first quarter, according to a new report released Wednesday by Statistics Canada.
The federal agency said Canadian corporations reported a 5.6 per cent decrease (or -$9.8 billion) to $165.9 billion in NIBT in the first quarter, impacting both the financial sector (-11.3 per cent) and the non-financial sector (-3.1 per cent).
“In the non-financial sector, NIBT decreased $3.9 billion (-3.1 per cent) from the fourth quarter of 2022 to $119.3 billion in the first quarter of 2023. Overall, NIBT was down in 17 of 39 non-financial industries. The oil and gas extraction industry largely contributed to the drop in NIBT, down $3.4 billion (-24.9 per cent) in the first quarter, mainly attributable to lower oil prices,” said the report.
“NIBT for transportation and transportation support activities decreased by $2.2 billion (-28.9 per cent) in the first quarter, mainly due to lower revenues, as a large non-recurring dividend income was posted in the fourth quarter of 2022. NIBT for motor vehicle and trailer manufacturing was down by $756 million in the first quarter of 2023, driven by higher expenses. The decline in NIBT for the non-financial sector was partly offset by an increase in NIBT for the mining and quarrying industry, up by $2.2 billion during the first quarter. This increase was mainly attributable to higher revenues as commodity prices increased during the quarter.”
StatsCan said NIBT for the financial sector decreased by $6.0 billion (-11.3 per cent) in the first quarter. It was down in six of the 13 financial industries.
“NIBT for the securities and commodity exchanges and portfolio management and miscellaneous financial investment activity industry recorded a $3.8 billion decrease on lower revenues in the first quarter, as large investment gains were posted in the fourth quarter of 2022. NIBT for the banking and depository credit intermediation industry edged up $343 million in the first quarter of 2023, partly attributable to an increase in net interest income,” said the report.
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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