Canada's productivity falls for 3rd straight quarter

Canadians were less productive in the second quarter of the year, the third consecutive quarter of negative growth and the worst performance in 18 years, Statistics Canada said Wednesday.

Canada's national statistical agency said the country's productivity shrank by 0.2 per cent in the April-to-June period. The weak performance represented the third straight negative quarterly showing for this key economic indicator.

"This is the longest series of consecutive quarterly declines since 1990," Statistics Canada said in a statement.

Canadian productivity shrank 0.6 per cent in each of the previous two quarters.

Productivity measures how much output comes from each worker and is an important indication of a country's economic health.

Productivity growth Canada U.S. 1987-'00 1.6 % 1.9 '00-'04 1.0 2.6 '04-'07 1.4 1.6 Source: Statistics Canada

A negative growth rate essentially means each worker made fewer widgets in the quarter.

Statistics Canada said the poor showing partly reflects flagging exports and negative gross domestic product growth through a portion of 2008.

The goods-producing sectors, which included mining, oil extraction and manufacturing, posted their fifth consecutive quarter of negative productivity growth.

Interestingly, however, productivity among manufacturing companies actually grew by 0.8 per cent.

BMO analyst Michael Gregory called the country's overall slumping productivity "the most serious problem facing Canada's economy, both in the short run and in the long run."

By contrast, American productivity in the same second quarter rose by 1.1 per cent.

CAW economist Jim Stanford noted that the country's national productivity is now lower than it was in the first quarter of 2006.

Writing for think-tank the Canadian Centre for Policy Alternatives, Stanford blamed the federal government.

"But there is nothing more fundamental to our long-term prosperity than productivity. And on that score, Canada's fundamentals have never been weaker than under the Harper government," he said in a statement.

Economists have been concerned that Canada is falling behind the United States and other countries in terms of productivity growth.

Historically, the U.S. has outperformed Canada and many other countries in productivity growth.

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