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Labour productivity, hourly compensation and unit labour cost
Canadian business labour productivity declined 0.2% in the second quarter of 2008, after declines of 0.6% in each of the previous two quarters. This is the longest series of consecutive quarterly declines since 1990.
In the second quarter, declining exports contributed to the second consecutive quarterly drop in real gross domestic product (GDP) of Canadian businesses. The number of hours worked in the Canadian business sector edged up 0.1% for the second consecutive quarter. This is a slowdown from 2007, when hours worked grew by 0.5% per quarter on average.
Labour productivity in the goods producing industries fell for a fifth consecutive quarter. Mining, oil and gas extraction industries, as well as construction, were the major contributors to the overall decline. In contrast, labour productivity in manufacturing grew 0.8%, its first gain since the third quarter of 2007.
In the United States, business labour productivity grew 1.1% in the second quarter, after increasing 0.6% in the previous quarter.
Growth of unit labour cost moderates
The growth rate of labour costs per unit of production, a barometer of inflationary pressure, decelerated to 1.2% for Canadian businesses in the second quarter, after increases of 1.6% and 1.9% in the previous two quarters. This reflects the deceleration in the growth of hourly compensation (+0.9%) compared with the first quarter (+1.4%), as well as the smaller decline in productivity.
Note to readersThis release contains a brief analysis of detailed data on labour productivity growth and other related variables. A more thorough analysis, including additional charts and tables, is available in the Canadian Economic Accounts Quarterly Review. The term "productivity" herein refers to labour productivity. For the purposes of this analysis, labour productivity, gross domestic product (GDP), and unit labour cost cover the business sector only. Calculations of the productivity growth rate and its related variables in the text and tables of this release are based on index numbers rounded to three decimal places. On CANSIM, these calculations would be based on index numbers that are rounded to one decimal place. Labour productivity is a measure of real GDP per hour worked. Productivity gains occur when the production of goods and services grows faster than the volume of work dedicated to their production. Unit labour cost is defined as the cost of workers' wages and benefits per unit of real GDP, and is, therefore, a measure of upward or downward pressure on prices from wages. Revisions With this release, the estimates for Canada were revised back to the first quarter of 2008 at the aggregate level and to the first quarter of 2007 at the industry level. In the United States, the Bureau of Labor Statistics recently revised its estimates of labour productivity in the business sector. The data released today incorporates revisions to the US data that affected GDP and hours worked from 2005 to 2007. The latest revisions for the last four years of Canada's productivity and related variables were released in The Daily on June 13, 2008. |
On average, the Canadian dollar depreciated against its US counterpart in the second quarter, but at a much slower pace than in the first quarter. Consequently, after declining by 0.3% in the first quarter, unit labour costs of Canadian businesses expressed in US dollars grew by 0.6% in the second quarter. For US businesses, unit labour costs declined by 0.1% in the second quarter, following two quarters of increases.
Annual Canadian productivity growth similar to the United States since 2004
In 2007, productivity in US businesses was 4.4% higher (revised down from 5.0%) than it was in 2004. Productivity in Canadian businesses grew 4.3% over the same period.
| Comparison of annual labour productivity growth in the business sector before and after revision | |||||
|---|---|---|---|---|---|
| Canada | United States1 | ||||
| Before revision | After revision | ||||
| annual % change | |||||
| 1981 to 2007 | 1.4 | 2.1 | 2.1 | ||
| 1981 to 2000 | 1.6 | 1.9 | 1.9 | ||
| 2000 to 2007 | 1.0 | 2.6 | 2.5 | ||
| 2004 to 2007 | 1.4 | 1.6 | 1.4 | ||
| 2004 | 0.2 | 2.9 | 2.9 | ||
| 2005 | 2.0 | 2.0 | 1.8 | ||
| 2006 | 1.6 | 1.0 | 0.9 | ||
| 2007 | 0.6 | 1.9 | 1.5 | ||
| |||||
Available on CANSIM: tables 383-0008 and 383-0012.
Definitions, data sources and methods: survey number 5042.
A more comprehensive analysis, including additional charts and tables, can be found in the second quarter 2008 issue of Canadian Economic Accounts Quarterly Review, Vol. 7, no. 2 (13-010-XWE, free), which is now available from the Publications module of our website.
Third quarter 2008 data for labour productivity, hourly compensation and unit labour cost will be released on December 10.
To order data, contact Client Services (productivity.measures@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Jean-Pierre Maynard (613-951-3654; fax: 613-951-3618; maynard@statcan.gc.ca), Income and Expenditure Accounts Division.
Table(s).
