Multifactor productivity growth estimates and industry productivity database, 2016
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Released: 2018-02-19
Multifactor productivity, measured as output per unit of combined labour and capital inputs, edged up 0.1% in the Canadian business sector in 2016, following a 1.0% decline in 2015 and a 1.4% increase in 2014. The modest increase in 2016 reflected a 1.1% rise in output which was offset by a 1.0% gain in the combined inputs of capital and labour.
These estimates incorporate the most recent supply-use tables released on November 8, 2017, as well as the latest estimates for fixed capital, hours worked and gross domestic product.
Multifactor productivity measures the extent to which inputs are efficiently used in the production process. Growth in multifactor productivity is often associated with technological change, organizational change or economies of scale.
Multifactor productivity is one of the three components of labour productivity, the other two being capital intensity and skills upgrading of labour. Labour productivity in the business sector increased 0.5% in 2016 owing to broad-based increases in capital intensity (+0.2 percentage points), skills upgrading (+0.3 percentage points) and multifactor productivity (+0.1 percentage points).
From 2010 to 2016, labour productivity in Canada's business sector increased at a faster pace than in the United States. Labour productivity increased 1.0% per year on average in Canada over this period, double the 0.5% average annual increase in the United States.
The relatively faster growth in labour productivity in Canada over this period was due to relatively larger increases in capital intensity in Canada. From 2010 to 2016, increases in capital intensity contributed an annual average of 0.5 percentage points to labour productivity growth in Canada. By comparison, capital intensity declined in the United States, subtracting an annual average of 0.1 percentage points from US labour productivity growth.
Multifactor productivity growth was slightly lower in Canada than in the United States. Multifactor productivity growth contributed an annual average of 0.3 percentage points to labour productivity growth in Canada compared to an annual average of 0.4 percentage points in the United States.
In both countries, skills upgrading contributed an annual average of 0.2 percentage points to labour productivity growth.
The relatively stronger labour productivity performance in Canada compared with the United States in the period from 2010 to 2016 followed the 1980-to-2010 period when labour productivity growth in Canada was much slower. Labour productivity increased 1.4% per year in Canada from 1980 to 2010, compared with 2.3% per year in the United States, owing to relatively slower growth in multifactor productivity in Canada. The increases in capital intensity and skill upgrading were similar in the two countries.
Chart 1
Labour productivity of Canada relative to that of the United States
Note to readers
Multifactor productivity estimates by major business sector for 1961 to 2016 are now available on CANSIM. The detailed industry productivity database for 1961 to 2014 is also now available.
Revisions
Data in this release reflect the latest supply-use tables for 2014, published in The Daily on November 8, 2017; data on fixed capital, published in The Daily on November 17, 2017; data on real gross domestic product, published in The Daily on December 22, 2017; data on hours worked, published in The Daily on February 16, 2018.
Multifactor productivity measures
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 gains 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 (15-206-X) available on our website.
The documentation about the revisions to multifactor productivity growth estimates can be found in "Revisions to the Multifactor Productivity Accounts," as part of The Canadian Productivity Review series (15-206-X) available from our website.
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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