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Labour productivity, hourly compensation and unit labour cost, first quarter 2014

Released: 2014-06-06

Labour productivity of Canadian businesses edged down 0.1% in the first quarter, following a 1.0% gain in the fourth quarter of 2013. It was the first decline since the third quarter of 2012.

Businesses continued to increase their output in the first quarter, but at a slower pace than in the previous four quarters, while hours worked rebounded following one quarter of decline.

Chart 1  Chart 1: Real output of Canadian businesses increases at a slightly slower pace than hours worked  - Description and data table
Real output of Canadian businesses increases at a slightly slower pace than hours worked

Chart 1: Real output of Canadian businesses increases at a slightly slower pace than hours worked  - Description and data table

Real gross domestic product (GDP) of businesses increased by 0.3%, compared with an average quarterly growth of 0.8% for the four quarters of 2013. Output in both goods-producing and service-producing businesses continued to rise, but at a slower rate than in the previous two quarters. The largest contributor to the first-quarter advance was the mining and oil and gas extraction sector.

At the same time, hours worked in the business sector were up 0.4%, after decreasing 0.3% in the fourth quarter of 2013. Hours worked in service-producing businesses rose 0.6%, after edging up 0.1% in each of the previous two quarters. Conversely, hours worked in goods-producing businesses (-0.2%) continued to decline, albeit at a much slower pace than in the previous quarter.

The overall productivity decline in the first quarter was due to falling productivity in service-producing businesses.

Productivity in goods-producing businesses grew by 0.8% in the first quarter, mainly because of a 1.1% increase in construction. This advance was more than offset by the 0.4% decline in the productivity of service-producing businesses. Productivity was down in every service-producing industry during the quarter except real estate services (+2.6%), information and cultural industries (+0.8%) and the finance and insurance sector (+0.5%).

By comparison, productivity of American businesses decreased 0.9% in the first quarter. This was the largest decrease since the first quarter of 2008.

For Canadian businesses, labour costs per unit of production rose 0.5% in the first quarter, the same rate as in the previous quarter.

The growth of average compensation per hour worked, which was 1.5% in the fourth quarter of 2013, slowed to 0.4% in the first quarter. All major industry sectors experienced slower growth in hourly compensation in the first quarter than in the previous quarter except real estate services (+4.1%), the finance and insurance sector (+2.3%) and information and cultural industries (+2.0%).

In the first quarter, the unit labour costs of Canadian businesses in American dollars posted their largest decline (-4.4%) in five quarters. The average value of the Canadian dollar relative to the US dollar registered its largest decrease (-4.9%) in five quarters of depreciation.

By comparison, the unit labour costs of American businesses were up 1.5%, after two quarters of declines.

  Note to readers

Revisions

With this release on labour productivity and related measures, data were revised back to the first quarter of 2013 at the aggregate and industry levels.

The Canadian System of macroeconomic accounts is implementing a new revision policy. Revisions to annual estimates of productivity, which affect the three most recent calendar years, will take place in December rather than June, as was previously the practice. In addition, comprehensive revisions (for which the time series is open beyond three years) will occur on a more frequent basis. The next annual and comprehensive revisions are planned for December 2014. For more information see Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X).

Productivity measure

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.

The System of macroeconomic accounts module, accessible from the Browse by key resource module of our website, features an up-to-date portrait of national and provincial economies and their structure.

Links to other releases from the national accounts can be found in the first quarter 2014 issue of Canadian Economic Accounts Quarterly Review, Vol. 13, no. 1 (Catalogue number13-010-X). This publication will be updated on June 19, at the time of the release of the national balance sheet and financial flow accounts.

Labour productivity, hourly compensation and unit labour cost data for the second quarter will be released on September 5.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (613-951-4636; mediahotline@statcan.gc.ca).

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