Canadian business productivity climbs as labor market stagnates
March 12, 2012
Canadian business output appears to be growing strongly, at least in comparison with its neighbor to the south. Statistics Canada reported last week that labor productivity in the country outpaced that of the U.S. in 2011 for the first time since 2006.
Because job creation appears to be gradually improving in the U.S. and contracting in Canada, analysts suggest Americans are replacing lost productivity with jobs while Canadians are doing the opposite.
After posting a strong 0.7 percent gain in the fourth quarter of last year, Canadian business productivity for the full year climbed 0.8 percent, down from 1.5 percent in 2010. The unemployment rate dropped to 7.4 percent from 7.6 percent in January as more people stopped looking for jobs, The Associated Press reports. Specifically, 37,900 fewer Canadians looked for work in February.
The data reflect a stubbornly slow labor market recovery in the country that has continued since last summer.
"Obviously we will not keep our eye off the ball and there will be a lot of measures in the budget to create jobs and get us on a long-term sustainable track," Prime Minister Stephen Harper said in a news conference last week.
However, Harper pointed to some bright spots in the jobs report, mainly the net positive increase in full-time employment. He also cited recent gains in the U.S. as hope of a stronger recovery in 2012. While unemployment is higher in the states - holding at 8.3 percent in February - the country added 243,000 jobs and has shown strong gains for the past several months.
Douglas Porter, deputy chief economist with the Bank of Montreal, warns that Canadians should not expect a similar showing in coming months, especially with continued uncertainty stemming from European markets.
"Basically, the easy job gains are gone," he told the Washington Post. "The things that really drove jobs early in the cycle are simply not going to be there, whether it's government hiring or retail related jobs driven by consumer spending."
Economists claim Canada needs to average between 15,000 and 20,000 new jobs each month to keep up with demand from population growth.