Canada's business sector still soft

After a solid rebound in 2Q, Canadian corporations' operating profits fell 5.4% in 3Q and are down 10.4%oya. Although the oil and gas extraction industry did contribute an outsized share of the overall 3Q decline, weakness was widespread, with 10 out of 22 major industries posting declines. 

Elsewhere, the Canadian Federation of Independent Businesses index of small business sentiment edged down in November. Although the index has moved off its lows from a few months ago, it remains at levels last seen in 2009 during the recession. 

The Canadian economy is turning the corner toward growth after a first-half contraction, the business sector, particularly oil and gas extraction will continue to drag. The forecasts thus already incorporate further declines in business investment consistent with these weak readings from the sector. 

"We still look for 2.3% saar GDP growth in 3Q15, with similar moderate rates of growth continuing into 2016", notes J.P. Morgan Research.