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Estimates of multifactor productivity growth in the provinces, 2014

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Released: 2016-09-13

Labour productivity in the Canadian business sector grew faster in Western Canada than in Eastern Canada from 2009 to 2014.

Chart 1  Chart 1: Labour productivity growth in the provinces, 2009 to 2014
Labour productivity growth in the provinces, 2009 to 2014

Labour productivity declined in both Newfoundland and Labrador (-1.9% per year) and Prince Edward Island (-0.8% per year).

Both Ontario and Quebec recorded average growth of just under 1.0% per year. In contrast, the four western provinces (Manitoba, Saskatchewan, Alberta and British Columbia) had growth rates of at least 1.9% per year, with Alberta posting the highest growth rate, at 2.3% per year.

Sources of labour productivity growth

Labour productivity can increase as a result of gains in capital intensity, skill upgrading or multifactor productivity (MFP) growth. MFP growth is the residual portion of gains in labour productivity that are not attributable to increases in the other two areas. MFP measures the efficiency with which inputs are used in production, and is often associated with technological change, organizational change, or economies of scale.

Analyses of the sources of labour productivity growth are often made using data collected over a number of years, because annual estimates of productivity growth can fluctuate considerably.

In general, the stronger growth in labour productivity in the western provinces after 2009 was attributable to strong increases in both capital intensity and MFP. Skill upgrading had a similar effect on growth in labour productivity across all the provinces.

Chart 2  Chart 2: Sources of labour productivity growth in the provinces, 2009 to 2014
Sources of labour productivity growth in the provinces, 2009 to 2014

From 2009 to 2014, capital intensity rose in each of the four western provinces. With the exception of Saskatchewan, these gains in capital intensity were accompanied by increases in MFP. In Saskatchewan, a decline in MFP of 1.6% per year was offset by the strongest growth (+3.7% per year) in capital intensity among all the provinces.

MFP growth was the main source of increases in labour productivity in both Quebec and Ontario. MFP growth in Ontario (+1.4% per year) was tempered by a decrease in capital intensity (-0.5% per year), resulting in labour productivity growth of 0.9% per year. Labour productivity growth in Quebec (+0.8% per year) was slightly lower, as there was little change in capital intensity in the province.

Newfoundland and Labrador, Prince Edward Island and Nova Scotia all recorded declines in MFP from 2009 to 2014. In Newfoundland and Labrador, a decrease in MFP (-3.7% per year) offset relatively strong growth in capital intensity (+2.0% per year). Labour productivity growth was stronger in Nova Scotia than in Prince Edward Island, mainly because of a larger gain in capital intensity. There was virtually no change in any component of labour productivity in New Brunswick.

  Note to readers

This release covers the experimental database on provincial multifactor productivity and related variables by business sector industry from 1997 to 2014. Data include multifactor productivity, value added, capital input and labour input in the aggregate business sector and major subsectors.

This experimental database was built using a methodology that is similar to the one used to obtain the national multifactor productivity estimates released in The Daily on February 3, 2016.

Data reflect estimates of gross domestic product by industry in the provinces from 1997 to 2014, published in The Daily on December 15, 2015; estimates of fixed assets for 2014, published in The Daily on November 24, 2015; and estimates of hours worked and labour productivity by industry in the provinces from 1997 to 2014, published in The Daily on May 2, 2016.

Multifactor productivity measures produced by Statistics Canada are derived from a growth accounting framework that allows analysts to isolate the effects of increases in input intensity and skill upgrading on growth in labour productivity. The residual portion of labour productivity growth that is not attributable to gains in input intensity and skill upgrading, is called "growth in multifactor productivity." Multifactor productivity measures the efficiency with which inputs are used in production, and is often associated with technological change, organizational change, or economies of scale.

Products

A description of the method used to derive productivity measures can be found in the "User Guide for Statistics Canada's Annual Multifactor Productivity Program," as part of The Canadian Productivity Review (Catalogue number15-206-X), which is available from the Browse by key resource module of our website under Publications.

Documentation on revisions to multifactor productivity growth estimates is available in "Revisions to the Multifactor Productivity Accounts," which is also part of The Canadian Productivity Review (Catalogue number15-206-X).

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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