Canada's Cost Competitiveness: An Exchange Rate and Productivity Story

Transcription

1 's Cost Competitiveness: An Exchange Rate and Productivity Story Andrew Sharpe Executive Director Centre for the Study of Living Standards Presented at the 57 th NABE Annual Meeting Session on North American Productivity and Competitiveness Sunday, October 11 1:15pm-2:15pm

2 Outline of Presentation I. Cost Competitiveness Trends I. Business Sector II. II. Manufacturing Exchange Rate Trends III. Productivity Explanations I. Growth Accounting II. Demand Conditions III. Investment IV. Innovation 2

3 Cost Competitiveness Trends: Business Sector 3

4 % Unit Labour Cost Growth, U.S. Dollars, Business Sector, and the, Compound Average Annual Growth Rate, Unit labour costs in US dollars Exchange rate Unit labour costs in Total nominal compensation per hour worked in Labour productivity (output per hour) in Source: CANSIM and BLS Labour Productivity and Costs Program. 4

5 Unit Labor Costs, Business Sector, and, U.S. Dollars, 2000=100, Source: CANSIM and BLS Labour Productivity and Costs Program. 5

6 Nominal Hourly Compensation, Business Sector, and, National Currency, 2000=100, Source: CANSIM and BLS Labour Productivity and Costs Program. 6

7 Output, Business Sector, and, National Currency, 2000=100, Source: CANSIM and BLS Labour Productivity and Costs Program. 7

8 Hours Worked, Business Sector, and, 2000=100, Source: CANSIM and BLS Labour Productivity and Costs Program. 8

9 Output Per Hour, Business Sector, and, National Currency, 2000=100, Source: CANSIM and BLS Labour Productivity and Costs Program. 9

10 Per Cent Relative Labour Productivity Levels (GDP per hour) in the Business Sector, ( as % of the ) Source: CSLS estimates. 10

11 Cost Competitiveness Trends: Manufacturing 11

12 % Unit Labour Cost Growth, U.S. Dollars, Manufacturing Sector, and the, Compound, Average Annual Growth Rate, Unit labour costs in US dollars 1.8 Exchange rate Unit labour costs in Hourly nominal labour cost in Labour productivity (output per hour) in Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 12

13 Unit Labour Costs, Manucfacturing, and the, U.S. Dollars, , 2000= Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 13

14 Nominal Hourly Labor Costs, Manufacturing, and the, National Currency, , 2000= Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 14

15 Real Value Added Output, Manufacturing, and the, National Currency, , 2000= Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 15

16 Hours Worked, Manufacturing, and the United States, , 2000= Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 16

17 Output Per Hour, Manufacturing, and the, National Currency, , 2000= Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 17

18 18 Exchange Rate Trends

19 U.S. Exchange Rate West Texas Intermediate Oil Price (U.S. Dollars Per Barrel) U.S. Exchange Rate (CAD per USD) and West Intermediate Oil Price (U.S. Dollars Per Barrel), U.S. Exchange Rate (Left Axis) West Texas Intermediate Oil Price (Right Axis) US Exchange Rate West Texan Intermediate Oil Price Source: CANSIM and FRED (St. Louis Fed) from U.S. Energy Information Administration values are an average based on data up to September 2015.

20 20 Productivity Explanations

21 Percentage Point Contributions of Capital Intensity, Labour Composition, and MFP to Labour Productivity Growth, Business Sector,, Labour Productivity Capital Intensity Labour Composition -0.3 MFP Source: CSLS estimates based on CANSIM

22 CSLS Labour Productivity Decomposition, Business Sector, Compound Average Annual Growth Rates, Per Cent,, Source: CSLS estimates based on Statistics data Within-Sector Effect Reallocation Level Effect -0.3 Reallocation Growth Effect Total

23 Per Cent Source: CSLS estimates based on CANSIM Annual Growth Rate of GDP and its Components,, and Gross Domestic Product 2.9 Household Consumption Government Consumption Expenditure Investment Exports

24 Per Cent 45 Inter Exports as a Share of GDP (Chained 2007 Dollars),, Source: CSLS estimates based on CANSIM

25 Per Cent 25 U.S. Imports for Consumption Market Share, China and, China 5 0 Source: CSLS estimates based on CANSIM

26 Per Cent ICT Investment per Worker in the Business Sector in as a Proportion of the, Current U.S. Dollars, Total ICT Investment Computer ICT Investment Communications ICT Investment Software ICT Investment Source: CSLS estimates. 26

27 Share of BERD in GDP (%) 2.5 Business Expenditures on Research and Development (BERD) Intensity in and Australia, Source: OECD Main Science and Technology Indicators for and Australia. OECD Main Science and Technology Indicators for from and CANSIM and CANSIM for is based on Statistics data for BERD and an estimate of GDP which assumes 2.0 per cent growth Australia

28 28 Appendix Charts

29 % Unit Labour Cost Growth, U.S. Dollars, Business Sector, and the, Compound Average Annual Growth Rate, Unit labour costs in US dollars 0.2 Exchange rate 2.4 Unit labour costs in Total nominal compensation per hour worked in Labour productivity (output per hour) in Source: CANSIM and BLS Labour Productivity and Costs Program. 29

30 % Unit Labour Cost Growth, U.S. Dollars, Business Sector, and the, Compound Average Annual Growth Rate, Unit labour costs in US dollars -1.1 Exchange rate 2.6 Unit labour costs in Total nominal compensation per hour worked in Labour productivity (output per hour) in Source: CANSIM and BLS Labour Productivity and Costs Program. 30

31 % Unit Labour Cost Growth, U.S. Dollars, Manufacturing Sector, and the, Compound Average Annual Growth Rate, Unit labour Exchange rate Unit labour costs in US costs in dollars Hourly nominal labour cost in 2.3 Labour productivity (output per hour) in Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 31

32 % Unit Labour Cost Growth, U.S. Dollars, Manufacturing Sector, and the, Compound Average Annual Growth Rate, Unit labour costs in US dollars -1.1 Exchange rate 1.4 Unit labour costs in Hourly nominal labour cost in Labour productivity (output per hour) in Source: Conference Board Inter Comparisons of Manufacturing and Unit Labor Costs Program. 32

33 GDP, Constant Dollars,, 2000=100, Non-manufacturing business sector Business sector Manufacturing 20 0 Source: CANSIM extended backward using growth rates from