Canadian Productivity Improvement is Key to Future Prosperity

There is some good economic news and some bad in an article released by Statistics Canada on April 17, which reveals interesting statistics about the productivity of each province during the period 1997-2010, using the most recent provincial multifactor productivity database.

From a national perspective generally, a slowdown in productivity and economic growth in Canada transpired between 2000 and 2010 compared to the late 1990s. On the good news side, in all provinces except Newfoundland and Labrador, the services sector became the predominant source of aggregate output and productivity growth.

Central Canada and the Atlantic provinces faired the worst over the period in question, with Ontario representing the largest slowdown of any province. Declining productivity in the Canadian manufacturing sector is cited in the article as the reason for this, and is largely attributed to changes in the business environment faced by Canadian manufacturers between 2000 and 2010, including the appreciation of the Canadian dollar and the recession in the United States.

Primarily, the decline in productivity and growth between 1997 and 2010 can be traced to the manufacturing, mining, and oil and gas industries. Declining demand from our best trading partner, the United States, was mostly responsible for the decline in manufacturing, while newer, non-conventional oil and gas extraction techniques, coupled with higher unit costs and lower productivity growth, were primarily responsible for the decline in those sectors throughout the period.

This gives pause and reflection to what future Canadian economic powers need to be developed: productivity in all sectors appears to be the key to prosperity. 

Advisors working with business owners may wish to share this data and engage in discussions about ways to improve productivity in their small to medium-sized enterprises.

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.

Source: http://www.statcan.gc.ca/pub/15-206-x/2013030/part-partie1-eng.htm