Corporate profit margins are at their highest point in nearlythree decades, propped up in part by a lower Canadian dollar and cheaper labour costs, a new report shows.
CIBC says average corporate profit margins hit a 27-year high in the fourth quarter of last year and are expected to remain robust despite the recent downturn in the oil patch.
"By all measures, higher corporate profit margins are here to stay," says Benjamin Tal, CIBC’s deputy chief economist and author of the report.
The bank said the average profit margin of all non-financial corporations grew to 8.2 per cent of sales in the fourth quarter of 2014. When the embattled energy sector is stripped out, profit margins are at 7.6 per cent, their highest in almost three decades.
It also noted the gap between non-energy profit margins and real GDP growth is “about as large as in any non-recessionary period in the past 25 years.”
CIBC said corporate profit margins have averaged about 5 per cent throughout recent history, butRead More »from Canada’s corporate profits at 27-year high: CIBC