Canadian ICT shows steady growth

Canada’s Information Communications Technology (ICT) market is doing relatively well.

Just how well?

Here’s the scoop: it’s now growing faster than the economy.

The ICT sector’s growth in the first quarter exceeded that of the overall economy by more than a full percentage point, according to Industry Canada.

In its Quarterly Monitor released last week, Industry Canada said ICT sector output (GDP) expanded by 1.6 per cent in Q1 of 2005, outperforming the overall Canadian economy’s 0.5 per cent Q1 growth.

The Quarterly Monitor reports on growth rates in GDP, manufacturing shipments, employment and exports for the sector and its main industries.

“We actually don’t do forecasts of the growth of the ICT sector,” said Industry Canada economist Nikola Sydor-Estable. “But the 1.6 per cent growth seems fairly consistent with [ICT growth] trends in recent years.”

Both the ICT manufacturing and services sub-sectors posted positive growth of 5.6 per cent and 0.7 per cent respectively. Computer equipment manufacturing grew by 22 per cent.

Sydor-Estable, who works in sector intelligence and analysis in the feds ICT branch, was not entirely sure about the reason for the sudden increase in computer equipment manufacturing.

“Actually, ICT manufacturing shipments were up by 5.1 per cent, compared to the 5.6 per cent growth in manufacturing GDP, which is not such a huge difference,” said Sydor-Estable. “Computer equipment shipments grew by 18 per cent in the first quarter, compared to a 22 per cent increase in computer equipment GDP contribution.”

GDP and shipments measures of output differ somewhat, according to Sydor-Estable. GDP is measured in constant dollars, which removes the upward bias of inflation. Shipments are measured in current dollars so decreasing prices of the product will cause a decrease in the shipments numbers, even if GDP stays constant.

“GDP measures value added to the economy by the sub-sector, while shipments are a measure of revenues,” Sydor-Estable said. “In the case of computer manufacturing, a hedonic price index is used that takes into account increases in the quality of the good being produced. For example, a $100 of computer today buys a lot more computer than $100 bought five years ago in terms of processing power.”

Using a hedonic price deflator shows a rapid decline in the production prices for computers in recent years, he said. GDP growth tends to be higher than shipments growth in the computer manufacturing industry. Employment in the ICT sector increased by 0.3 per cent. Manufacturing jobs grew by 0.5 per cent, with ICT services positions increasing by 0.3 per cent.

Industry Canada was not able to answer specific questions regarding ICT sector employment by press time.

ICT output was 14 per cent higher in Q1 of 2005 than it was at the end of 2001, compared to 10.5 per cent higher for the overall Canadian economy. The ICT sector has grown by 89 per cent since Q1 of 1997, almost three times as much as the Canadian economy at 33 per cent growth.

Related links:

Oil price hike may stifle IT growth

IT industry growth – a threat or an opportunity?

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