Productivity in Canada increased by an average of 1.3 per cent per year between 1997 and 2008.

But a Statistics Canada report released Wednesday shows productivity growth slowed considerably after 2003 when compared with the 1997 to 2003 period.

Regionally, only three provinces outpaced the national average for the entire period — Newfoundland and Labrador (with 4.5 per cent growth), Saskatchewan (with 2.1 per cent growth) and Manitoba (with 1.9 per cent growth.)

The main contributors to the productivity slowdown during the latter years were Ontario, British Columbia and Quebec, the data agency said.

Labour productivity is the amount of goods or labour produced per every hour of work. It is a driver of GDP and a key factor in improvements in the standard of living of a country.

Between 1997 and 2000, on the back of a booming technology sector, Canada's productivity improved by an average of three per cent per year.

This was followed by a 0.6 per cent slowdown between the years 2000 and 2003 as Canadian businesses felt the impact of the downturn in the technology sector, as well as the aftermath of the September 11 attacks in the United States.

From 2003 to 2007, Canada's trade and financial services and manufacturing helped boost annual average productivity growth to one per cent, even as manufacturing downsized over this period.

The energy and commodity sectors were booming during that period. Although the natural resource sector contributed significantly to the increase in hours worked, it had a negative impact on productivity growth at the time, Statistics Canada said.

During the economic slowdown that began in late 2008, labour productivity declined 0.8 per cent as real GDP contracted in the latter part of the year.

For the period of the study, the total number of hours worked increased by an average of 1.8 per cent per year, nationally. Hourly compensation increased by an average of 3.7 per cent per year during the same period.