Canadian earnings season is off to a bad start, but most of that can be blamed on Manulife’s weak results, National Bank Financial reports.

In a research note, NBF says that the weaker than expected results from the 70 companies reporting last week has dimmed earnings growth expectations for the quarter from 7% for the S&P/TSX Composite Index, to just 1.6%.

“The negative surprise in the financials sector is clearly the main factor behind this reduction in the expected growth for Q2, it says.

NBF that Manulife is the sole reason for this, as the insurance giant reported loss of $2.4 billion for the quarter, or $1.36 a share, was a huge negative surprise against the expected loss of $1.1 billion.

“While Q2 share-weighted earnings are now estimated at $19.2 billion more than all the decrease from the previous week $20.1 billion level is explained by Manulife’s giant miss,” it says.

Excluding Manulife, the earnings results so far are actually better than expected, NBF notes, adding that apart from financials and utilities every other sector is recording positive surprises.

“We remain positive for the earnings results to come,” NBF concludes. “For the whole year, the blended growth rate is still seen at 22.2% even after Manulife reports and the resulting negative earnings revision for the rest of 2010.”

IE