Wednesday, November 28, 2007

Bad Productivity News

From the Globe and Mail:

Canada's usually weak productivity growth returned to dismal last year after a respectable rise in 2005, according to a report that has economists warning that the country's standard of living could soon suffer.

National labour productivity, one of the key indicators of an economy's health, rose a meagre 1 per cent last year, down from a solid 2.2-per-cent gain in 2005, Statistics Canada said yesterday.

Last year's productivity growth is "truly depressing" and shows that 2005 was "just a blip," said Toronto-Dominion Bank chief economist Don Drummond.

Although Canada's job market has been robust, low productivity will eventually hurt employment, Mr. Drummond said. "As we approach a flattening of our labour force, all of Canada's economic growth will have to come from productivity gains."

--I'm not quite sure how to take this news. It's possible that you could attribute some of the lower productivity to a lower unemployment rate. A.K.A. when less people are employed only the highly productive have jobs. However, I doubt that's the entire story, it could be more evidence that Canada's increased growth could be mainly due to high commodity prices and that's not a good thing. Get the full version here.

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