Canada’s Information Technology and Communications Industry: Industrial Outlook Autumn 2006

After enjoying two years of strong growth, Canada’s information technology and communications sector will record more subdued growth this year, held back by a drop in exports of computers and semiconductors to the U.S.

But despite weaker overall production growth, sector profits are set to rise to $5.4 billion—the highest they’ve been since 1998—partly as a carry-over from last year’s expansion.

Production growth will pick up over the next several years, thanks to increases in business investment and consumer spending on new information technology and communications goods and services, both here and abroad. The convergence of cable and traditional telecom services is also driving investment and innovation.

Labour cost growth is accelerating, as companies are finding it increasingly difficult to recruit enough qualified staff. But rising production will allow revenue growth to outpace cost growth, leading to annual sector profits of $7.1 billion by 2010.