Productivity Now Redux
Productivity Now Redux
Managing Director & Chief Economist
Douglas Porter has over 30 years of experience analyzing global economies and financial markets. As Chief Economist at BMO Financial Group and author of the popular…
Douglas Porter has over 30 years of experience analyzing global economies and financial markets. As Chief Economist at BMO Financial Group and author of the popular…
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Canada’s productivity puzzle remains unsolved. Output per hour fell yet again in Q2, even as the U.S. advance was sturdy. And, yes, the weakness is a problem.
The chasm between Canadian and U.S. productivity continues to widen. In the second quarter of the year, Canada’s output per hour worked fell at a 0.7% annual rate, compared with a solid 2.5% U.S. advance. More concerning is that the meek quarterly result is no fluke, as it matches the performance over the past four quarters (-0.7%), compared with a sturdy 2.7% y/y gain in the U.S. economy. If this was just a one-year trend, we could perhaps put it down to short-term cyclical factors. But, even over the past five years—i.e., looking through the pandemic—Canadian productivity has averaged a decline of 0.1% per year since mid-2019 compared with growth of 1.9% stateside (Chart 1). U.S. productivity has thus outpaced Canada by 10% in the past five years alone.
