OTTAWA, Dec. 18, 2012 /CNW/ - A weak economic outlook and cautious
consumers will leave several Canadian industries without much growth
this year and next, according to the latest Canadian Industrial Profile published by The Conference Board of Canada and the Business
Development Bank of Canada (BDC).
Because of limited sales growth and competitive pressures that will keep
prices in check, industries such as retail and wholesale trade, food
services and accommodation will see little bottom-line growth in 2013.
By comparison, the transportation and warehousing industry can count on
price increases and developed cost-control practices to enable strong
profit growth going forward.
The Canadian Industrial Profile service provides a five-year forecast
for production, employment, revenue, cost and profitability for six
industries each quarter. The Autumn 2012 edition includes outlooks for: Accommodation, Food and Beverage, Food Services, Retail, Transportation and Warehousing, and Wholesale Trade.
"Canada is not immune to the economic uncertainty that has weakened
global demand for goods and services. Modest employment growth is
limiting Canadians' income gains. Consumer confidence remains weak and
household debt continues to mount - all of which dampen the willingness
of shoppers to spend on retail items, food and drink, dining out and
travel," said Michael Burt, Director, Industrial Economic Trends at The Conference Board of
"In the current business environment, characterized by strong
competitive pressures, small and medium-sized businesses who invest in
information technology will be better equipped to navigate the
challenging economic times ahead," said Pierre Cléroux, Vice President
and Chief Economist, BDC.
Retail - Pressure Mounts from Inside and Outside Canada
Industry profits have slipped below 2010 levels in the past two years,
to less than $13 billion annually in 2011 and 2012. Retail sales
figures have been sluggish in recent months. With Canadian overnight
trips to the U.S. hitting a new high in June thanks to new higher duty
free exemptions and a strong dollar - and new competitors entering the
market - the outlook remains modest for the industry.
Wholesale Trade - Consumer Wariness Comes Through to Wholesales
With retail sales stalled since the first half of 2012, the outlook for
the wholesale trade industry has weakened as well. Industry profits
achieved double-digit annual growth in 2010 and 2011. But profits
levels are forecast to remain at about $19 billion in 2012, and the
industry is on track to lose 19,000 jobs this year.
Transportation and Warehousing - Global Uncertainty Threatens Demand
Weak economic performance is slowing demand for air, truck, rail and
water transportation services. Yet industry profitability is expected
to increase more than 30 per cent in 2012 to $6 billion. Even though
revenue growth has slowed this year, the industry has been able to
control costs and prices are expected to rise by seven per cent.
Food and Beverage - Industry Squeezed By Higher Costs, Little Price
Output in the food and beverage industry will decline for the second
consecutive year. Furthermore, manufacturers are being squeezed by both
rising costs and pressure to limit price increases from large
retailers. As a result, the industry is forecast to achieve a profit of
$4.1 billion in 2012, virtually the same annual level as the previous
two years. Organic and natural products (which enjoy higher profit
margins) and new overseas markets are likely to be the best options for
industry growth in the future.
Food Services - Consumers Tighten their Belts
With consumers cutting back on the amount they spend dining out,
full-service restaurants are most affected by the tough economic
environment. Rising food prices for products such as wheat and corn
raise costs, while fierce competition limits pricing power among
restaurants. Industry profits, which increased by more than 15 per cent
annually in 2010 and 2011, are expected to grow much more slowly in the
years to come.
Accommodation -Travel Budget Constraints Challenge Industry
With the exception of Alberta, where demand for accommodations continues
to grow significantly, the industry is contending with slower growth in
business and consumer travel spending. Yet the industry has continued
to improve occupancy rates by limiting the number of rooms being built.
Profits are expected to remain in the range of $850 million annually
for the next couple of years.
About the Canadian Industrial Profile Service
The Canadian Industrial Profile Service is part of The Conference Board
of Canada's Industrial Economic Trends research. In all, outlooks for 23 industries are completed each year.
The publications are available at www.e-library.ca. BDC clients who wish to receive a copy of the profiles free of charge
can contact their BDC account manager.
Canada's business development bank, BDC, puts entrepreneurs first. With
almost 2,000 employees and more than 100 business centres across the
country, BDC offers financing, subordinate financing, venture capital and consulting services to more than 28,000 small and medium-sized
companies. Their success is vital to Canada's economic prosperity. For
more information, visit www.bdc.ca.
SOURCE: BUSINESS DEVELOPMENT BANK OF CANADA
For further information:
The Conference Board of Canada, Media Relations,
Tel.: 613- 526-3090 ext. 448
BDC, Public Affairs