Labour productivity, hourly compensation and unit labour cost

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First quarter 2011  (Previous release)

The labour productivity of Canadian businesses increased for the third consecutive quarter, rising 0.4% in the first quarter following a 0.3% advance in the previous quarter.

Productivity of Canadian businesses continues to rise

Businesses boosted production in the first quarter while further increasing hours worked.

The real gross domestic product (GDP) of businesses increased 1.2% in the first quarter, its largest advance in a year. Both goods-producing businesses and services-producing businesses contributed to the increase in GDP. The biggest gain was in manufacturing.

Hours worked in the business sector were up 0.7%, following a 0.5% increase the previous quarter. Employment growth accelerated, rising by 0.9%, after holding steady in the fourth quarter, while hours worked per job edged down 0.2%.

The overall gain in business productivity in the first quarter was attributable to goods-producing businesses (+1.2%), following a 0.1% decline in the fourth quarter. Construction (+2.2%) and manufacturing (+0.8%) were the main contributor to this increase, while mining and oil and gas extraction posted a sharp decline (-3.2%).

In services-producing businesses, productivity was unchanged. Productivity gains in retail trade, transportation and warehousing, and administrative services were offset by declines in wholesale trade and professional services.

In the United States, productivity in the business sector edged up 0.2% in the first quarter, a slower rate of growth than in the previous quarter (+0.7%).

In Canadian businesses, labour costs per unit of production increased 0.6% in the first quarter, similar to the rate observed in each of the previous three quarters.

Average compensation per hour worked again increased faster than productivity, growing 1.0% in the first quarter, echoing the results of the previous two quarters.

The value of the Canadian dollar in relation to the US dollar rose at roughly the same pace in the first quarter compared with the previous quarter (+2.7%). That was reflected in a 3.3% increase in the unit labour costs of Canadian businesses in American dollars, the same growth rate as in the previous quarter.

By comparison, American business unit labour costs grew by 0.4% in the first quarter, after falling 0.7% in the fourth quarter.

A historical revision (see note) was performed on the labour variables that contribute to the productivity measures released today. The combined result of those revisions was an average 0.1 percentage point increase in the annual growth rate of business labour productivity between 1981 and 2010.

Note: 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.

This release incorporates several revisions of the source data: the annual three-year revision of the National Income and Expenditure Accounts released on May 30, and revisions of the Labour Force Survey estimates released on January 28, 2011, and January 29, 2010. These resulted in revisions of the quarterly series for labour productivity and related variables from the first quarter of 1981 at the aggregate level.

In addition, the seasonally adjusted estimates of hours worked and employment were revised using the X-12-ARIMA seasonal adjustment method. All aggregate-level variables also incorporate a new benchmarking and reconciliation method developed by Statistics Canada's methodology units.

The annual three year revisions of national accounts' data to gross domestic product (GDP) by industry will not be published until the end of September 2011 (the usual revision release date for GDP by industry) and therefore will not be incorporated in the productivity data until the release of the third quarter data in December 2011. The labour variables by industry will be revised back at the same time.

The CANSIM tables associated with all the quarterly data on productivity and related variables now contain index numbers rounded to three decimal places to harmonize the level of precision with that of annual productivity data.

Available on CANSIM: tables 383-0008 and 383-0012.

Definitions, data sources and methods: survey number 5042.

Additional tables and links to other releases from the national accounts can be found in the first quarter 2011 issue of Canadian Economic Accounts Quarterly Review, Vol. 10, no. 1 (13-010-X, free), now available from the Key resource module of our website under Publications. This publication will be updated on June 20, at the time of the release of the national balance sheet accounts.

Labour productivity, hourly compensation and unit labour cost data for the second quarter will be released on September 9.

For more information, or to enquire about the concepts, methods or data quality of this release, contact the information officer (613-951-3640, iead-info-dcrd@statcan.gc.ca), Income and Expenditure Accounts Division.