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Profits: Prophet of Renewed Weakness?
03 September 2010
Commentary from Peter Hall, vice president and chief economist, Export Development Canada (EDC).
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EDC
Peter Hall
Canada Exports
Corporate profits, volatile at the best of times, are usually the punching bag of recessions. Likewise, as an economy emerges from recession, profits can yield key clues about the durability of recovery. For Canada, this profit cycle is alive and well. What is this prophet saying about near-term prospects?
Profits play a key role in any economic recovery. As activity gathers steam, orders rise quickly. Firms, having just endured recession, have no immediate need to add to capacity, so much of the renewed demand goes straight to the bottom line. As throughput gathers momentum, this surge in profits in turn enables businesses to hire additional workers, and eventually to embark...
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