Pedestrians stroll through Toronto's financial district. (Credit: Brent Lewin/Bloomberg files)


September 06, 2024 Tags:

Labour productivity in Canada declined by 0.2% in the second quarter of 2024, marking a second consecutive quarterly drop, according to Statistics Canada. This follows a 0.3% decrease in the first quarter. Overall productivity fell by 0.7% on an annual basis.
This ongoing decline in productivity, crucial for determining disposable income and living standards, is raising concerns among economists. Douglas Porter, chief economist at the Bank of Montreal, emphasized that this is a widespread issue affecting the entire economy, not just specific industries. He warned that if this trend continues, Canada's standard of living could further decline.

Despite a 0.6% increase in hours worked due to more job openings, output growth failed to match this rise. The service sector contributed significantly to the decline, with information and cultural industries down by 2.1%, real estate services by 1.5%, and professional services by 0.9%.

Pedro Antunes, chief economist at the Conference Board of Canada, highlighted that productivity has been on a downward trend since before the pandemic, and Canada has historically lagged in productivity growth. This concern has also been noted by the Bank of Canada, with senior deputy governor Carolyn Rogers declaring the issue as critical earlier this year.

Antunes pointed out that Canada's business investment in machinery, equipment, and infrastructure is low compared to labour, which affects overall productivity. GDP per capita also dropped for the fifth consecutive quarter in the second quarter of this year, showing a negative trend in Canadians' standard of living.

Canada's productivity has fallen behind the U.S. by 10% over the past five years, and among OECD countries, Canada now ranks lower than Italy and Spain. Antunes identified significant declines in productivity in transportation and warehousing (-9.4%), construction (-11.5%), and utilities (-13.5%) compared to 2019 levels. The construction sector, in particular, has seen little innovation, affecting its productivity despite substantial investment.

Porter noted that increased capital spending on residential housing might be diverting resources from more productive sectors. He emphasized that while housing is essential, the focus on real estate at the expense of other areas may be detrimental to overall productivity.

In summary, the persistent drop in productivity is impacting Canadians' earnings and overall economic well-being. Without addressing these issues, Canada may continue to fall behind other developed nations in productivity and living standards.

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

You may also like

TSX Ends Lower While U.S. Markets Climb with Earnings Hope

Canada’s leading stock index ended the week with a small dip, just as U.S. markets moved upward, powered by early....

Big Tech Helps Wall Street End a Wild Week on a High Note

Wall Street closed a bumpy week on a positive note Friday, thanks to a strong performance from major tech companies.....

TSX Surges Over 250 Points as U.S. Markets Gain for Third Day

Canada's main stock index closed sharply higher on Thursday, climbing more than 250 points in a widespread rally, with mining....

Stocks, Dollar Climb as Trump Eases Pressure on China Tariffs

Global financial markets showed signs of recovery this week as U.S. President Donald Trump backed away from aggressive tariff threats....

Canada Hits Pause on Climate and Diversity Disclosure Rules

The Canadian Securities Administrators (CSA) has announced an indefinite halt to its plans for introducing stricter climate and diversity reporting....

Wall Street Surges as Trump Eases Tariff Talk and Fed Criticism

Wall Street had a strong rally on Wednesday, following a global market surge, as President Donald Trump softened his stance....

Wall Street Bounces Back After Monday Dip, Dollar Steady

After a turbulent start to the week, Wall Street made a strong comeback on Tuesday, wiping out Monday’s steep losses.....

 Markets Rebound: TSX and Wall Street Post Strong Gains

Canada’s main stock index saw a sharp rebound Tuesday, rising nearly 300 points as energy, financial, and metal sectors pushed....

Big Tech’s ‘Magnificent Seven’ reels as Trump shakes market

As Big Tech companies prepare to release their quarterly earnings, they're grappling with political uncertainty that has sent shockwaves through....

Wall Street Sinks as Global Trust in U.S. Takes a Hit

Wall Street plunged on Monday, with major stock indexes taking a steep fall as investors around the world grow uneasy....

Stock Slide After Long Weekend: TSX and U.S. Markets Fall

Canada’s main stock index took a sharp dive on Monday, dropping nearly 200 points as trading resumed after the long....

Trump's Trade War Expands: Pharma and Chip Industries Targeted

The Trump administration has opened a fresh investigation into the import of pharmaceuticals and semiconductor chips, citing national security concerns.....