Canadian 2nd-Qtr Labor Productivity Falls Fastest in Five Years

Canadian labor productivity fell at the fastest pace in five years between April and June, with companies increasing hours worked as production declined, government figures showed.

Productivity fell 0.9 percent in the second quarter as business output decreased 0.3 percent and hours worked rose 0.6 percent, Statistics Canada said today in Ottawa. Economists predicted the measure would fall 0.7 percent, based on the median of 11 estimates in a Bloomberg survey.

“The decline comes against a backdrop of temporary factors which affected output more than labor, including wildfires in Northern Alberta and tsunami in Japan,” the report said.

Productivity is a measure of how much an employee produces in an hour of work, and lower efficiency limits how fast the economy can grow without sparking inflation. Bank of Canada Governor Mark Carney has said companies need to use a rising currency to boost investment and regain competitiveness.

Unit labor costs rose 0.9 percent in the second quarter, Statistics Canada’s report said.

Measured in U.S. dollars, unit labor costs rose 2.8 percent.

Labor productivity was 0.3 percent higher in the second quarter than the same period a year earlier.

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