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Economic News

Corporate Profits Rise as Non-residential Business Investment Falls in Q3

December 4, 2023
Florence Jean-Jacobs
Principal Economist
Florence Jean-Jacobs
Principal Economist


  • Profits of Canadian non-financial corporations increased in Q3, boosted by oil prices (graph 1). This follows four consecutive quarterly declines. Besides the petroleum manufacturing sector, profits also increased in the motor vehicle manufacturing sector, despite a decline in sales in July and August. 
  • Meanwhile, non-residential business investment fell in Q3, following an increase in Q2. Business investment in non−residential structures and machinery and equipment fell 2.8% in nominal terms (-2.6% in real terms). The largest contributors to the decline were engineering structures (-3.7%, the first decline since Q1 2022) and aircraft and other transportation equipment (-19.0%, vs. a 48.8% jump in Q2) (table 1).


The weakening economic outlook is taking a toll on businesses’ investment decisions, and it appears that the gap is widening between Canada and the US on a per capita basis (graph 2). With higher interest rates, the price of non−residential business investment has increased sharply, meaning that even though businesses spend considerable sums, the capital stock is not growing. If Canadian businesses pull back on investments, this could further hamper their competitiveness vis à vis the US at a time when productivity-enhancing capital expenditures are much needed.