Multifactor productivity growth lowest in Alberta in 2016

Measures whether inputs are efficiently used in the production process and is often associated with technological change

Mario ToneguzziMultifactor productivity growth in the business sector varied substantially across provinces in 2016 and was the lowest in Alberta, says Statistics Canada in a report released  onMonday.

The federal agency said it was highest in Prince Edward Island (+4.7 per cent) and lowest in the three oil-producing provinces, led by Alberta (-3.8 per cent) and followed by Newfoundland and Labrador (-3.5 per cent) and Saskatchewan (-0.5 per cent). For Canada overall, multifactor productivity increased by 0.1 per cent in 2016 following a 1.0 per cent decline in 2015 and 1.4 per cent increase in 2014.

“Multifactor productivity measures the extent to which inputs are efficiently used in the production process. Growth in this area is often associated with technological change, organizational change and economies of scale,” said StatsCan.

It said the pattern of multifactor productivity growth across provinces in 2016 generally mirrored that of real gross domestic product growth, with the exception of Newfoundland and Labrador.

Real GDP growth equalled or exceeded two in four provinces in 2016, led British Columbia (+3.8 per cent), and followed by Ontario (+2.8 per cent), Manitoba (+2.2 per cent) and Prince Edward Island (+2.0 per cent). These four provinces also posted relatively strong growth in multifactor productivity, led by Prince Edward Island (+4.7 per cent), and followed by Manitoba (+1.7 per cent), British Columbia (+1.4 per cent) and Ontario (+1.2 per cent), explained StatsCan.

Real GDP declined in two western oil-producing provinces in 2016, falling by 5.1 per cent in Alberta and 1.2 per cent in Saskatchewan. These two provinces also saw a decline in multifactor productivity in 2016.

For Newfoundland and Labrador, real GDP growth (+1.8 per cent) was accompanied by even stronger increases in combined capital and labour inputs (+5.6 per cent) in 2016. Multifactor productivity growth, measured as the difference in real GDP growth and the growth of combined capital and labour inputsm was -3.5 per cent in 2016, added the federal agency.

“In Canada, multifactor productivity growth slowed in 2015 and 2016, following robust growth the previous four years. From 2010 to 2014, multifactor productivity increased by 0.8 per cent per year in the Canadian business sector,” said StatsCan.

“The slowing of multifactor productivity growth between the two periods was largely attributable to lower multifactor productivity growth in Alberta, which fell from a 1.3 per cent increase per year on average from 2011 to 2014 to a 4.8 per cent decline on average per year in 2015 and 2016. The relatively strong multifactor productivity growth in Canada from 2011 to 2014 reflected stronger growth in British Columbia (+1.5 per cent per year on average), Alberta (+1.3 per cent) and Ontario (+0.9 per cent).”

Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.

Multifactor productivityThe views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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