Bank of Canada’s governor Stephen Poloz has identified Canada’s service sector as one of the key drivers of economic growth. His statements come as Canada’s economy continues to recover from the global financial slump.
In a speech directed to the C.D. Howe Institute in Toronto, Poloz mentioned that while there will be always demand for Canadian resources it is the services sector that is growing.
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“Since the onset of the global financial crisis, growth in Canada’s service sector has been stronger on average than in the goods sector,” Poloz said in a statement. “Most of the employment growth seen in Canada since late 2014 has been in service industries that pay above-average wages, helping to support national income.”
The Canadian Press
reported that while the Canadian economy took a huge hit during the financial crisis in 2008-09, as well as following the recent downturn in commodity prices, the service sector continued to expand steadily. So successful has the sector become that it has far outpaced the growth rate of the goods-producing sector, which actually slowed down.
Over 80% of working Canadians are employed in services, compared to the less than 20% who are in the goods production sector.
Poloz pointed out that the loss in export capacity before and after the financial crisis, along with the recent crash in resource prices resulted in an $80-$90 billion loss for the Canadian economy. He also noted that since January 2001, about 30 jobs have been created in the service sector for every job lost in the goods producing sector.
Although the average wage in the service sector is lower than in the goods producing sector, Poloz said that wages will still vary depending on the industry within the sector.
“It probably will not surprise you that the average wage in the finance and insurance industry is higher than that in manufacturing. But so is the average wage in the transportation and warehousing industry,” he stated. “And, together, those two industries employ more Canadians and produce more output than all of Canada’s manufacturers.”
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