Statistics Canada
Symbol of the Government of Canada

Productivity and Canadian manufacturing

Warning View the most recent version.

Archived Content

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Productivity is fuel for economic growth. Doing more with less—by training higher-skilled workers, using less expensive materials, or introducing new technologies—enables factories to be more efficient. This reduces costs, leaving more dollars to create even more products, raise wages or lower prices for consumers.

Productivity growth is so important that it has accounted for more than half of the growth in Canada’s gross domestic product over the past 40 years. It matters for individual Canadians as well: over the past four decades, the rise in hourly wages has closely followed the rise in labour productivity.

Unfortunately for Canadian manufacturers, one of the major economic developments in 2006 was the slowdown in productivity growth for goods-producing industries. After brisk 3.6% growth in 2005, productivity stalled in 2006, edging up just 0.1%.

Falling productivity in 2006 was driven by a decline in output per employee: each employee in manufacturing produced, on average, less in 2006 than in the previous year. This lowered the ‘capacity utilization’ of Canada’s factories—how close they were running to their full potential. At year-end, Canadian industries were operating at just 82.5% of their capacity, a drop of 1.2% from 2005.

In fact, so far this decade, factories have not come close to matching their stellar productivity gains during the high-tech boom in the late 1990s. The sudden productivity downturn in 2006 was particularly notable in industries not normally considered high-tech, such as textiles, clothing and furniture. Many factories in these industries closed in 2006.