Bank of Canada Senior Deputy Governor Tiff Macklem blamed the increase in the Canadian dollar for Canada's loss of competitiveness in a recent speech to the Economic Council of Canada. A second factor was weak productivity growth, which can be traced back to lack of investment in research and development.
There has been considerable debate about whether the high dollar was contributing to the loss of Canadian manufacturing jobs. Given comments last year by former Bank of Canada Governor Mark Carney, a senior Bank of Canada official saying that, “the majority of this loss of competitiveness reflects the appreciation of the Canadian dollar”, seems to be a shift in the Banks position.
What Tiff Macklem didn't mention was wages. A chart that accompanied his speech showed why. Contrary to what Canadians have been led to believe, wages are increasing faster in the U.S. than in Canada.