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Labour productivity, hourly compensation and unit labour cost, first quarter 2015

Released: 2015-06-05

Labour productivity of Canadian businesses edged down 0.1% in the first quarter, following gains of 0.3% in each of the previous two quarters. This was the first decline in a year.

In the first quarter, the real output of businesses declined for the first time since 2011. There was also a decrease in the number of hours worked.

Chart 1  Chart 1: Labour productivity of Canadian businesses edges down, after three quarters of growth - Description and data table
Labour productivity of Canadian businesses edges down, after three quarters of growth

Chart 1: Labour productivity of Canadian businesses edges down, after three quarters of growth - Description and data table

Real gross domestic product (GDP) of businesses fell 0.3% in the first quarter, the first decline since the second quarter of 2011. The decrease was mainly attributable to goods-producing businesses, which saw production decline following six consecutive quarterly increases. Production in service-producing businesses was unchanged following three quarters of growth.

Hours worked in the business sector were down 0.2% in the first quarter, following gains in the previous two quarters. Hours worked in goods-producing businesses decreased 1.1% in the first quarter, with most major industry sectors posting significant declines, particularly mining, quarrying, and oil and gas extraction. In contrast, the number of hours worked in service-producing businesses rose 0.2% during the quarter.

In the first quarter, the 0.2% decline in productivity in service-producing businesses was partly offset by a 0.1% increase in productivity in goods-producing businesses.

Real estate services, wholesale trade as well as accommodation and food services posted the largest decreases in productivity. Construction and manufacturing also saw declines. Productivity was essentially unchanged in retail trade, transportation and warehousing as well as finance and insurance. During the first quarter, productivity increased in agriculture and forestry, mining, quarrying, and oil and gas extraction, utilities as well as arts, entertainment and recreation.

In the United States, the labour productivity of businesses fell 0.8% in the first quarter, following a 0.6% decline the previous quarter. This was the first time since 2006 that American productivity declined in two consecutive quarters. In the first quarter, the real GDP of American businesses was down 0.3% following a 0.7% increase in the previous quarter, while hours worked rose 0.5% following a notable 1.3% gain the previous quarter.

For Canadian businesses, labour cost per unit of output increased 1.2% in the first quarter, following little change in the previous three quarters.

The growth of average compensation per hour worked, which was 0.3% in the fourth quarter of 2014, accelerated to 1.1% in the first quarter of 2015.

In the first quarter, growth in hourly compensation increased at a similar pace for both goods- (+1.1%) and service-producing businesses (+1.2%). Hourly compensation was up for all major industrial sectors during the quarter.

In American dollars, the unit labour costs for Canadian businesses fell 7.4% in the first quarter, following a 4.2% decline in the previous quarter. The average value of the Canadian dollar relative to the American dollar decreased 8.5% during the quarter, a rate of depreciation more than twice that of the previous quarter.

By comparison, the unit labour costs of American businesses rose 1.6% following a 1.3% gain in the previous quarter.

  Note to readers

Revisions

With this release on labour productivity and related measures, data were revised back to the first quarter of 2014 at the aggregate and industry levels.

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 2015 issue of Canadian Economic Accounts Quarterly Review, Vol. 14, no. 1 (Catalogue number13-010-X). This publication will be updated on June 12, 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 4.

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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