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

Released: 2014-12-05

Labour productivity of Canadian businesses edged up 0.1% in the third quarter, after posting a substantial 2.0% gain in the second quarter.

In the third quarter, businesses increased their output at a slower pace than in the previous quarter, while hours worked rebounded sharply following a decline in the second quarter.

Chart 1  Chart 1: Labour productivity edges up in the third quarter - Description and data table
Labour productivity edges up in the third quarter

Chart 1: Labour productivity edges up in the third quarter - Description and data table

Real gross domestic product of businesses rose 0.8% in the third quarter, a slower pace than the revised growth rate of 1.2% (up from the preliminary estimate of 1.0%) in the second quarter. Service-producing businesses, particularly in retail trade, wholesale trade, finance and insurance as well as real estate services, were mainly responsible for the increase in output in the third quarter. The output of goods-producing businesses was almost unchanged (+0.1%) during the quarter.

At the same time, hours worked devoted to production in the business sector rose 0.7% in the third quarter. This advance came in the wake of an equivalent decline in the second quarter. Hours worked were up 1.0% in goods-producing businesses and 0.6% in service-producing businesses. The increase was widespread, with the arts and entertainment sector (+4.4%) posting the largest gain. Hours worked declined in retail trade (-0.5%), transportation and warehousing services (-0.5%) and utilities (-1.9%).

In the third quarter, a 0.4% gain in the productivity of service-producing businesses was largely offset by a 0.8% decrease in the productivity of goods-producing businesses. Most major industry sectors posted slower productivity growth in the third quarter than in the second quarter, with the exception of the finance and insurance sector (+1.0%), transportation and warehousing services (+1.4%) and utilities (+0.6%).

The retail and wholesale trade sectors made the largest positive contribution to the quarterly change in business productivity in the third quarter.

In the United States, the labour productivity of American businesses grew 0.5% in the third quarter, after posting a 0.7% advance in the second quarter and a 1.3% decrease in the first quarter.

For Canadian businesses, labour costs per unit of production were up 0.2% in the third quarter, following zero growth in the previous quarter.

In the third quarter, the average compensation per hour worked rose 0.4%, outpacing the modest gain in labour productivity. In the second quarter, hourly compensation and productivity both increased sharply, but at a similar pace.

Hourly compensation grew at a similar rate in goods-producing businesses (+0.4%) and service-producing businesses (+0.3%) in the third quarter. The largest contributors to the overall growth of hourly compensation in businesses were retail trade, wholesale trade, transportation and warehousing services as well as manufacturing.

In American dollars, the unit labour costs of Canadian businesses rose 0.4% in the third quarter, after posting a 1.2% increase in the previous quarter. The average value of the Canadian dollar relative to the American dollar was almost unchanged during the quarter (+0.1%).

By comparison, the unit labour costs of American businesses decreased 0.3%, after falling 1.0% in the second quarter.

  Note to readers

Revisions

With this release on labour productivity and related measures, data were revised back to the first quarter of 2010 at the aggregate and industry levels. These revisions are consistent with those incorporated in the Canadian economic accounts and gross domestic product by industry published on November 28, 2014.

This release also incorporates revised annual data on the provincial and territorial economic accounts and gross domestic product by industry published on November 5, 2014.

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 third quarter 2014 issue of Canadian Economic Accounts Quarterly Review, Vol. 13, no. 3 (Catalogue number13-010-X). This publication will be updated on December 15, 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 fourth quarter of 2014 will be released on March 6, 2015.

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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