Canadian businesses remained concerned in the fourth quarter due to higher interest rates and high inflation

February 27, 2023 

The manufacturing industry contributes to the rise in net income before taxes for the non-financial sector

Tight labour markets and resilient consumer demand contributed to upward pressure on the policy rate, increasing 100 basis points in the fourth quarter. Consequently, higher interest costs, along with elevated inflation, continued to concern Canadian enterprises in the quarter.

In the non-financial sector, net income before taxes (NIBT) increased $6.2 billion (+6.5%) from the third quarter to $101.8 billion in the fourth quarter. Overall, NIBT was up in 31 of the 39 non-financial industries.

The petroleum and coal product manufacturing industry led the gains in NIBT, up $3.7 billion in the fourth quarter.

Motor vehicle and trailer manufacturing also posted a notable gain in NIBT, increasing by $886 million to $749 million in the fourth quarter, mainly because of higher production in assembly plants.

NIBT for the transportation and transportation support activities industry rose 10.8% (+$442 million) in the fourth quarter, driven by a record-setting increase in carloadings of wheat.

NIBT for the real estate industry decreased by $351 million (-2.9%) to $11.7 billion in the fourth quarter.

The banking and credit intermediation industry leads the increase in net income before taxes for the financial sector

NIBT for the financial sector increased by $3.6 billion (+9.3%) in the fourth quarter. It was up in 9 of the 13 financial industries.

NIBT for the banking and credit intermediation industry rose $3.7 billion in the fourth quarter, mainly attributable to a rise in net interest income (+$4.6 billion).

Provision for credit losses continued to increase (+$840 million), reaching $1.9 billion, as economic outlook perspectives are expected to worsen in the coming quarters.

NIBT for the life, health and medical insurance carriers industry was up $921 million in the fourth quarter, as revenues from premiums increased 11.8%.

Source: Statistics Canada
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