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Estimates of multifactor productivity growth in the provinces, 2016

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Released: 2018-04-09

Multifactor productivity growth in the business sector varied substantially across provinces in 2016. It was highest in Prince Edward Island (+4.7%) and lowest in the three oil producing provinces, led by Alberta (-3.8%) and followed by Newfoundland and Labrador (-3.5%) and Saskatchewan (-0.5%). For Canada overall, multifactor productivity increased by 0.1% in 2016 following a 1.0% decline in 2015 and 1.4% increase in 2014.

Multifactor productivity measures the extent to which inputs are efficiently used in the production process. Growth in this area is often associated with technological change, organizational change and economies of scale.

In 2016, the pattern of multifactor productivity growth across provinces generally mirrored that of real gross domestic product (GDP) growth with the exception of Newfoundland and Labrador.

Chart 1  Chart 1: Growth in multifactor productivity and real gross domestic product (GDP) in the provinces, 2016
Growth in multifactor productivity and real gross domestic product (GDP) in the provinces, 2016

Real GDP growth equalled or exceeded 2% in four provinces in 2016, led British Columbia (+3.8%), and followed by Ontario (+2.8%), Manitoba (+2.2%) and Prince Edward Island (+2.0%). These four provinces also posted relatively strong growth in multifactor productivity, led by Prince Edward Island (+4.7%), and followed by Manitoba (+1.7%), British Columbia (+1.4%) and Ontario (+1.2%).

Real GDP declined in two western oil-producing provinces in 2016, falling by 5.1% in Alberta and 1.2% in Saskatchewan. These two provinces also saw a decline in multifactor productivity in 2016.

For Newfoundland and Labrador, real GDP growth (+1.8%) was accompanied by even stronger increases in combined capital and labour inputs (+5.6%) in 2016. Multifactor productivity growth, measured as the difference in real GDP growth and the growth of combined capital and labour inputs was negative 3.5% in 2016.

In Canada, multifactor productivity growth slowed in 2015 and 2016, following robust growth the previous four years. From 2010 to 2014, multifactor productivity increased by 0.8% per year in the Canadian business sector.

The slowing of multifactor productivity growth between the two periods was largely attributable to lower multifactor productivity growth in Alberta, which fell from a 1.3% increase per year on average from 2011 to 2014 to a 4.8% decline on average per year in 2015 and 2016.

The relatively strong multifactor productivity growth in Canada from 2011 to 2014 reflected stronger growth in British Columbia (+1.5% per year on average), Alberta (+1.3%) and Ontario (+0.9%).

  Note to readers

This release covers the experimental database on provincial multifactor productivity and related variables by the business sector industry from 1997 to 2016. Data include multifactor productivity, value-added, capital input and labour input in the aggregate business sector and major sub-sectors.

This experimental database is constructed using a methodology that is similar to the one used to construct multifactor productivity estimates at the national level released in The Daily on February 19, 2018.

Data in this release reflect the estimate of gross domestic product by industry in the provinces and territories for 2016, published in The Daily on November 8, 2017; estimates of stock and consumption of fixed assets for 2016, published in The Daily on November 17, 2017; and estimates of hours worked and labour productivity in the provinces and territories for 2016, published in The Daily on February 16, 2018.

Multifactor productivity measures at Statistics Canada are derived from a growth accounting framework that allows analysts to isolate the effects of increases in input intensity and skills upgrading on the growth in labour productivity. The residual portion of labour productivity growth that is not attributable to increases in input intensity and skills upgrading, is called 'growth in multifactor productivity'. It measures the efficiency with which the inputs are used in production. Growth in this area 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 series (Catalogue number15-206-X).

The documentation about the recent revisions to multifactor productivity growth estimates can be found in "Revisions to the Multifactor Productivity Accounts," as part of The Canadian Productivity Review series (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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