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Economic Viewpoint

Canada’s Post‑pandemic Productivity Performance May Be Worse than Thought, but It’s Not Condemned to Mediocrity

April 1, 2024
Randall Bartlett
Senior Director of Canadian Economics

The recent release of labour productivity data in Canada saw an end to the five-quarter slide in this key indicator of economic health. But it may not last, as total hours worked could again outpace output. Even worse, our analysis of a more apples-to-apples comparison with the US points to Canadian labour productivity having performed worse since 2019 than the oft-quoted data suggest. And if OECD forecasts prove correct, the gap with the US could get worse still. The reason: US investments in innovation over the past decade are paying off in a major way.

However, this dystopian vision for Canada’s future is not inevitable. As Budget 2024 fast approaches, the federal government would be wise to take the opportunity to refocus its plans for encouraging business investment and innovation in Canada. The ongoing erosion in productivity and living standards makes clear that what’s being done now isn’t working. However, a change in policy direction can’t wait for more deliberation. Action is urgently needed.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.