Insights & Analysis

August 29, 2022

Weekly EconMinute—Pre-tax profit by industry

In this week’s EconMinute, we’re talking about pre-tax profit by industry.

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On August 24, Statistics Canada released the results of its quarterly survey of enterprise (for- and non-profit) financial statements. This survey gathers balance sheet data from enterprises across the country to give an overview of the financial picture at the industry level.

One of the key datapoints this survey tracks is each industry’s net income before taxes (NIBT)—or how much profit each industry makes before income taxes. Based on this metric, Canada’s two highest earning non-financial industries in the second quarter of 2022 were oil and gas extraction and support services (shorthand: oil and gas) and real estate.

However, since the start of the pandemic, these two industries have followed two very different journeys to their status as the two highest-earning industries. While the real estate industry has been consistently profitable since 2020, the oil and gas extraction and support services industry was deep in the red early in the pandemic.

Here’s what the data show:

  • In Q2 2022, oil and gas recorded an NIBT of $13.51 billion, and real estate recorded $11.85 billion.
  • At the outset of the pandemic (Q1 2020), it was a different story. Real estate recorded $7.12 billion, whereas oil and gas recorded a net-income before taxes loss of $25.22 billion.
  • The real estate industry has been highly profitable for each of the last 10 quarters due to cheap debt, high sales volumes, a housing supply crunch, and pandemic-related pent-up demand from people able to save money.
  • Oil and gas extraction and services, however, experienced four deeply unprofitable quarters during the pandemic until commodity prices rose in 2021.
  • Between Q1 2020 and Q2 2022, real estate has seen $92.79 billion in NIBT, whereas oil and gas has seen $10.20 billion.

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