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Canadian corporations earned $69.4 billion in operating profits in the second quarter of 2008, up 2.5% from the first quarter, helped by an increase in commodity prices.

Overall, 15 of 22 industry groups reported higher profits. Among the 15 industry groups that helped to push profits higher, 2 main groups (oil and gas extraction and manufacturing) led the way. The gains in manufacturing were primarily due to petroleum and coal products manufacturers. Offsetting some of these gains were declines in both depository and credit intermediaries and insurance and related carriers.

Profits in the non-financial sector grew 4.1% to $50.6 billion, while those in the financial sector declined 1.7% to $18.8 billion.

Crude and natural-gas prices push profits higher

Oil and gas extractors and refiners (petroleum and coal products manufacturers) continued to benefit from increased crude oil and natural gas prices in the second quarter, as both experienced strong gains in profits.

Mining profits advance on healthy demand

Mining profits advanced as prices for potash and other inputs to fertilizer strengthened, as worldwide demand for crop fertilizers continued to grow. In addition, coal (a key input into the production of steel) helped push profits higher, reflecting robust worldwide demand for steel.

Manufacturers continue to struggle with rising input costs

Excluding petroleum and coal manufacturers, profits for the manufacturing sector were relatively flat, dampened by higher input costs. The Raw Materials Price Index showed prices paid for raw materials increased in each month within the quarter.

Motor vehicle and parts manufacturers posted losses in the second quarter amidst on-going restructuring partly brought on by changing consumer preferences in light of high fuel prices.

Chemical, plastics, and rubber product manufacturers earned higher profits in the second quarter on the strength of fertilizer manufacturers.

Transportation and warehousing: Fuel costs continue to undermine growth

Transportation and warehousing earnings were down, as higher fuel costs continued to hurt profit margins. Slumping shipments for automotive and lumber products continued to affect railway profits. Results from the April and May Railway Carloadings Survey show loadings of lumber were at their lowest for those months in eight years. Meanwhile, airlines responded by increasing fees.

Consumers continue to spend in the second quarter

Telecommunications' earnings grew in the second quarter as strong subscription growth, coupled with relatively new revenue streams such as wireless data plans, helped push profits higher. Retailers also saw their operating profits grow. However, this growth was the smallest in six quarters.

Banks lead the decline in the financial industry

The 1.7% decline to $18.8 billion in the financial sector represents the third straight quarter in which profits have decreased.

Banking and other depository credit intermediaries' earnings retreated for the third consecutive quarter, as a result of losses from exposure to asset backed commercial paper and lower investment banking revenue.