Labour productivity of Canadian businesses edged up 0.2% in the first quarter. This was the second consecutive quarter of weak growth, following three quarters of decline.
Business sector real output expanded in the first quarter, mainly as a result of an increase in hours worked. In the previous quarter, business output and hours worked had been almost flat.
The growth in real gross domestic product (GDP) of businesses was 0.7% in the first quarter, the fastest pace since the third quarter of 2011 (+1.9%). Both goods-producing businesses and service-producing businesses contributed to the increase. The largest gains were in mining and oil and gas extraction, as well as in the arts, entertainment and recreation sector.
Hours worked in production (+0.5%) also increased in the first quarter. Hours worked rose 1.3% in the goods-producing sector and 0.2% in the service-producing sector. Construction, retail trade, and real estate and rental and leasing services were the main contributors to the increase in hours worked in the first quarter.
Productivity of goods-producing businesses decreased 0.2% in the first quarter, after rising 0.1% in the fourth quarter of 2012. Productivity gains in mining and oil and gas extraction (+4.5%) and manufacturing (+0.2%) were not enough to offset declines in agriculture, forestry, fishing and hunting (-3.9%) and construction (-2.4%).
In service-producing businesses, productivity edged up 0.2%, a rate similar to that of the previous quarter, primarily due to increases in arts, entertainment and recreation (+5.2%), finance, insurance and holding companies (+1.6%) and professional, scientific and technical services (+0.9%).
In the United States, the productivity of American businesses grew by 0.5% in the first quarter, after falling 0.4% in the previous quarter.
Productivity in Canadian businesses increased slightly faster than hourly compensation (+0.1%) in the first quarter. As a result, labour cost per unit of output in Canadian businesses decreased 0.1%, the first decline since the third quarter of 2011.
When the first quarter 1.8% depreciation of the Canadian dollar against the American currency is factored in, Canadian businesses’ unit labour costs in US dollars declined 1.8%. This was the first decrease since the fourth quarter of 2011.
In comparison, American businesses saw their unit labour costs decline 1.3% in the first quarter, following a 2.9% advance the previous quarter.
Note to readers
This release incorporates the National economic accounts revisions published on May 31, and the revised annual data on provincial and territorial labour productivity by industry published on May 15. These resulted in revisions of the quarterly series for labour productivity and related variables back to the first quarter of 1981 at the aggregate level and back to the first quarter of 2007 at the industry level.
The term “productivity” in this release refers to labour productivity. For the purposes of this analysis, labour productivity and related variables cover the business sector only. Labour productivity is a measure of real gross domestic product (GDP) per hour worked. Unit labour cost is defined as the cost of workers’ wages and benefits per unit of real GDP.
All the growth rates reported in this release are rounded to one decimal place. They are calculated with index numbers rounded to three decimal places, which are now available on CANSIM.
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