If you thought Canada’s economy couldn’t get any worse, then you haven’t seen the latest labour productivity numbers.
What happened: New data from Statistics Canada showed that labour productivity fell 1% between April and June, the most significant decline since the fourth quarter of 2022. Manufacturing and wholesale trade, impacted by the U.S. trade war, overall experienced the most significant drops.
- It’s part of a long-term trend in which a few causes have been cited, including a sluggish construction sector and a higher concentration of non-permanent residents in low-paid work.
Yes, but: The fall in labour productivity is not unique to Canada, with an OECD report from December 2024 showing that other countries like Australia, the U.K., and France have all experienced significant slowdowns over the last decade.
Why it matters: The main problem, per a TD report from last year, is a persistent productivity decline in the goods-producing sector versus services. Addressing this decline means Canada has to get better at building things, even as trade turmoil drags down GDP growth.
What’s next: Prime Minister Mark Carney is meeting with his cabinet this week in preparation for presenting a budget this fall. On the agenda are major infrastructure projects, which could help address part of the problem in goods-producing industries.—GS