People walk through the Montreal Eaton Centre on in February. Canada’s productivity gap with the U.S. has steadily widened since the turn of the millennium, new StatsCan report suggests.Christopher Katsarov/The Canadian Press
The years-long boom in oil and other commodity prices that ended in spectacular fashion last decade masked how badly Canada’s weak labour productivity has weighed down the country’s economy since the late 1990s, a new report by Statistics Canada found.
And that’s left Canada to fall even further behind the United States on critical gauges of economic health, according to the study’s authors, Statscan analysts Carter McCormack and Ryan Macdonald, with those gaps only widening in recent quarters.
The more productive a country is, the more goods and services it can produce with the same amount of work, which translates into stronger real wages and improved living standards.
Yet since the turn of the millennium, Canada’s productivity gap with the U.S. has steadily widened, with relative productivity tumbling by 26 per cent over that time, according to the report.
Canada’s grinding productivity weakness was papered over by the faster growth in hours worked and trade benefits that came with higher commodity prices, giving Canada an edge over the U.S. in real per capita gross domestic product and real per capita gross national income, another measure of economic health.
When oil prices crashed in 2014-15, the illusion shattered.
While Statscan reported earlier this month that Canada’s labour productivity improved in 2025 for the second year in a row, U.S. gains in productivity and economic growth have been stronger.
“The relative decline in productivity growth is the principal reason why Canada is falling behind, regardless of how economic performance is measured,” the authors of the new report wrote. Barring a reversal in these trends, “improvements in Canada’s living standards will be slower than in the United States.”
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