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Tuesday, March 23, 1999
For release at 8:30 a.m.
1997
Multifactor productivity growth in the Canadian business sector rose 2.9% in 1997, the same rapid growth rate shown in the labour productivity estimates released last July. The new data, which incorporate revisions to the national accounts and the capital stock estimates, now show that growth during the 1990s is more robust than previously reported. However, the underlying story remains basically unchanged - productivity rose rapidly during most of the 1960s and has considerably slowed since then.
Productivity is a measure of production efficiency that most economists regard as being one of the important determinants of the standard of living. Its growth rate is calculated as the difference between the growth in the amount of output produced (real GDP) and the growth of the quantity of all inputs used, such as labour and machinery and equipment. When all factors of production are included, it is referred to as "multifactor productivity". Multifactor productivity is a more comprehensive measure, but more difficult to estimate. Moreover, because it involves subtracting differences from growth rates, it is subject to greater estimation error. A second measure (labour productivity) is the output per unit of labour. This measure does not directly consider other important factors such as capital.
Goods producing industries, which include manufacturing, contributed most to the overall increase in multifactor productivity in 1997. These industries gained 3.3% overall, compared with an increase of 2.3% by service-producing industries. In Canadian manufacturing, multifactor productivity rose 3.9%, ending two years of virtually no change.
Between 1988 and 1997, goods-producing firms outperformed service-producing firms in multifactor productivity and labour productivity. During this time period, multifactor productivity among firms producing goods increased at an average annual rate of 0.9% compared with an average annual increase of 0.3% among service-producing firms. These increases are similar to those observed during the 1980s.
Multifactor productivity growth during the 1990s is now estimated to have averaged about 0.7% annually compared with 0.5% in the 1980s and 0.6% during most of the 1970s. Given the inherent difficulties in measuring productivity, these results are not significantly different from one another. Nevertheless, they are much weaker than the 2.1% average annual growth rates experienced during the 1960s.
The release of the multifactor productivity estimates, using revisions to the National Accounts and Capital Stock data, confirms the picture of the recent productivity growth in the economy first observed with the release last summer of the new labour productivity estimates. These estimates show that growth over the 1990s has been somewhat more robust than previously stated and that, for the business sector, the multifactor productivity performance (much as the labour productivity performance) is similar to that of the United States since 1988 (the peak of the last business cycle). Finally, this release reveals that the multifactor productivity performance in the non-manufacturing sector has been slightly ahead of the United States, whereas performance in Canada has been behind in the manufacturing sector.
Productivity refers to multifactor productivity, which is a measure of the technical efficiency of production. Its growth rate is calculated as the difference between the growth of the quantity of output produced (real value added) and the weighted growth of the quantity of all primary inputs used.
Labour productivity, or real GDP per hour worked, is the ratio between output and labour input (hours worked). Economic performance as measured by labour productivity must be interpreted carefully since these estimates reflect changes in the other factors of production in addition to growth in productive efficiency.
Business sector goods include agriculture, fishing, forestry, mining activities, manufacturing, construction and public utilities. Business sector services comprise transportation and storage, communications, wholesale and retail trade, finance, insurance and real estate, and the group of community, business and personal services.
Average annual labour productivity is also similar in the 1980s and the early 1990s. As with multifactor productivity growth, labour productivity growth is lower in more recent years than during the 1960s.
Just as with the previous estimates, the revised estimates still indicate a long-run deceleration of productivity since 1973. However, there has been no productivity slowdown in more recent years compared with the previous cycle in the 1980s.
Chart: As with labour productivity,
multifactor productivity in the business sector shows a slowdown after 1973
For a number of technical reasons, inter-country comparisons of productivity are especially difficult and subject to more than normal uncertainty. The comparisons of productivity growth in Canada and the United States in this release use the published estimates that most closely resemble one another. The methodologies are basically the same but are tailored by each country to reflect its own economic environment. Ongoing research is examining the extent to which changes in some of these calculations would affect inter-country comparisons.
In terms of multifactor productivity growth in 1997, Canadian firms outperformed their American counterparts. For the overall business sector, multifactor productivity estimates show a slightly stronger annual performance in Canada (+0.7%) than in the United States (+0.4%) since the mid-1980s. During the same period, labour productivity rose 1.1% per year in Canada and 1.2% in the United States.
Chart: Since 1985, multi-factor
productivity for Canadian businesses increased at a slightly higher pace than that of U.S. businesse
Although overall multifactor productivity gains in the combined goods and services sectors favoured Canada in more recent years, the picture is quite different for manufacturing businesses. From 1961 to 1985, Canadian and U.S. manufacturing multifactor productivity grew at a similar pace of 1.1%. Since 1986, both labour and multifactor productivity have grown more rapidly in the United States than in Canada. Since that time, multifactor productivity in Canada has grown at 0.6% per year while U.S. manufacturing has risen by 1.4% per year. (The gap in growth between Canada and the United States is quite a bit less than previously reported, mainly because of downward revisions to U.S estimates.)
Table: Multifactor productivity based on gross output excluding
intra-industry transactions - Manufacturing industries
______________________________________________________________________________
Canada United States
______________________________________________________________________________
annual % change
______________________________
1961-96 1.0 1.2
1961-85 1.1 1.1
1961-73 1.7 1.9
1973-86 0.7 0.5
1986-96 0.6 1.4
1995 0.5 3.8
1996 1.0 2.6
______________________________________________________________________________
Note: The multifactor productivity measures for both countries are based on
a gross output measure that excludes intra-industry transactions.
Source: Multifactor productivity data for the United States came from the
Bureau of Labor Statistics in their news release: Multifactor
productivity trends, 1997 on May 6, 1998
There are only slight differences between Canada and the United States for the whole business sector. Canadian industries producing services and those producing goods other than manufacturing, which together account for about 75% of all business outputs, have more than counterbalanced the weaker performance of Canadian manufacturers during more recent years.
Comparing the relative performance of 17 manufacturing industries in both countries, it is evident that the source of the differences between the two countries originates mostly in the outstanding performance of the electrical products and the commercial and industrial machinery industries in the United States. These two industries include computers and computer parts. With annual multifactor productivity gains respectively of 5.7% and 3.4% since 1986, these two industries far outperformed their Canadian counterparts. Given their much larger share in U.S. manufacturing, this explains in large part the overall manufacturing gap in productivity growth between the two countries. Elsewhere, there are much smaller differences between the two countries. In some industries, such as pulp and paper, and chemical products, Canadian manufacturers have outperformed their American counterparts.
Chart: Multifactor productivity in
manufacturing industries for the 1990 to 1995 period
Available on CANSIM: 9456-9458 and 9460-9483.
For more information, or to enquire about the concepts, methods, and data quality of this release, contact John Baldwin (613-951-8588) or René Durand (613-951-3278), Micro Economic Studies and Analysis (fax: 613-951-5403).
Table: Breakdown of annual growth of real GDP between productivity and inputs
______________________________________________________________________________
1966- 1973 1973-1979 1979-1988
______________________________________________________________________________
annual % change
_______________________________________________
Business sector -
overall
Real GDP 4.9 3.6 3.2
Labour 1.9 2.2 1.9
Capital 4.3 4.3 3.8
Combined inputs 2.7 3.0 2.6
Multifactor
productivity 2.1 0.6 0.5
Labour productivity 3.8 1.5 1.0
Business sector -
services
Real GDP 5.6 4.9 3.8
Labour 3.2 3.5 3.0
Capital 4.3 5.1 4.6
Combined inputs 3.6 4.0 3.5
Multifactor
productivity 1.9 0.8 0.3
Labour productivity 3.5 1.7 0.8
Business sector - goods
Real GDP 4.2 2.5 2.6
Labour 0.7 0.8 0.7
Capital 4.4 3.8 3.2
Combined inputs 1.9 2.0 1.8
Multifactor
productivity 2.3 0.4 0.8
Labour productivity 4.2 1.6 1.6
Manufacturing
industries
Real GDP 4.9 2.5 2.5
Labour 1.3 0.7 0.4
Capital 4.0 1.6 2.6
Combined inputs 2.1 1.0 0.9
Multifactor
productivity 2.8 1.5 1.5
Labour productivity 3.8 2.0 1.7
______________________________________________________________________________
1988-1997 1996 1997
______________________________________________________________________________
annual % change
_______________________________________________
Business sector -
overall
Real GDP 2.0 2.5 5.2
Labour 0.9 3.1 2.7
Capital 2.1 1.0 1.5
Combined inputs 1.4 2.3 2.3
Multifactor
productivity 0.7 0.1 2.9
Labour productivity 1.1 -0.6 2.9
Business sector -
services
Real GDP 2.6 2.6 5.3
Labour 1.8 3.3 2.9
Capital 3.8 2.7 3.2
Combined inputs 2.3 3.1 3.0
Multifactor
productivity 0.3 -0.5 2.3
Labour productivity 0.9 -0.5 3.0
Business sector - goods
Real GDP 1.2 1.7 4.9
Labour -0.3 2.8 2.3
Capital 1.0 1.1 0.9
Combined inputs 0.2 2.0 1.6
Multifactor
productivity 0.9 -0.3 3.3
Labour productivity 1.6 -0.7 2.9
Manufacturing
industries
Real GDP 1.6 1.2 6.4
Labour -0.4 2.7 3.3
Capital 1.4 0.7 1.5
Combined inputs 0.2 1.9 2.5
Multifactor
productivity 1.3 -0.6 3.9
Labour productivity 1.9 -1.5 3.0
______________________________________________________________________________
Note: The output used to derive both multifactor productivity and labour
productivity is a value-added measure.
Table: Comparison of average annual growth of multifactor productivity and
labour productivity between Canada and the United States - Business sector
______________________________________________________________________________
Multifactor productivity Labour
productivity
______________________________ _____________
Canada United States Canada
______________________________________________________________________________
1961 to 1997 1.2 1.0 2.1
1961 to 1973 2.4 2.3 4.0
1966 to 1973 2.1 1.6 3.8
1973 to 1979 0.6 0.5 1.5
1979 to 1988 0.5 0.2 1.0
1988 to 1997 0.7 0.4 1.1
1995 0.8 0.1 1.5
1996 0.1 1.7 -0.6
1997 2.9 0.7 2.9
______________________________________________________________________________
Labour
productivity
_____________
United States
______________________________________________________________________________
1961 to 1997 1.9
1961 to 1973 3.3
1966 to 1973 2.7
1973 to 1979 1.3
1979 to 1988 1.3
1988 to 1997 1.2
1995 0.3
1996 2.7
1997 1.4
______________________________________________________________________________
Note: The output used to derive both multifactor productivity and labour
productivity is a value-added measure.
Source: Multifactor productivity data for the United States came from the
Bureau of Labor Statistics in their news release: Multifactor
productivity trends, 1997 on February 11, 1999. Labour productivity
data were published in: Productivity and costs, fourth quarter and
annual averages, 1998 on March 9, 1999
February 1999
Light bulb and tube manufacturers sold 23.3 million light bulbs and tubes in February, a 9.3% decrease from the 25.7 million sold a year earlier.
Year-to-date sales at the end of February 1999 totalled 44.9 million light bulbs and tubes, a decrease of 11.3% from the 50.6 million sold a year earlier.
The February 1999 issue of Electric lamps (43-009-XIB, $5/$47) will be available shortly.
For more information, or to enquire about the concepts, methods, and data quality of this release, contact Russell Kowaluk (613-951-0600; kowarus@statcan.gc.ca), Manufacturing, Construction and Energy Division.
February 1999
Data on February grain deliveries are now available.
Available on CANSIM: matrix 976-981.
The delivery data are contained in the February issue of Cereals and oilseeds review (22-007-XPB, $15/$149), which will be available in May. See How to order publications .
For more information, or to enquire about the concepts, methods, and data quality of this release, contact Karen Gray (204-983-2856; graykar@statcan.gc.ca), or Susan Anderson (613-951-3859; andesue@statcan.gc.ca), Grain Marketing Unit, Agriculture Division.
System of national accounts, gross domestic product by industry, December 1998
Catalogue number 15-001-XPB
(Canada: $15/$145; outside Canada: US$15/US$145).
Refined petroleum products, December 1998
Catalogue number 45-004-XPB
(Canada: $21/$206; outside Canada: US$21/US$206).
Focus on culture: quarterly bulletin from the culture statistics program, Winter 1998
Catalogue number 87-004-XPB
(Canada: $9/$27; outside Canada: US$9/US$27).
All prices exclude sales tax.