Productivity continues to grow in the first quarter, but at a more modest pace than in the previous quarter
Labour productivity of Canadian businesses grew 0.2% in the first quarter of 2025, a marked slowdown compared to the 1.2% growth observed in the fourth quarter of 2024. This also represents a second consecutive quarterly increase—the first time there have been consecutive quarterly increases since the start of the COVID-19 pandemic.
Chart 1: Productivity growth slows sharply in the first quarter
Description - Chart 1
Data table: Productivity growth slows sharply in the first quarter
Note: Q = quarter.
Source: Table 36-10-0206-01.
In the first quarter, hours worked devoted to the production in the business sector rebounded after a quarter of decline. Meanwhile, growth in business output continued at the same pace as in the previous quarter but outpaced the growth in hours worked.
Real gross domestic product of businesses rose 0.6% in the first quarter, an identical pace to the previous quarter.
Goods-producing businesses are mainly responsible for the overall growth in productivity
In the first quarter, the overall growth in productivity was mainly attributable to goods-producing businesses. Productivity growth in goods-producing businesses, which had reached 0.3% in the previous quarter, accelerated to 0.8% in the first quarter, with four of the five sectors posting increases.
In service-producing businesses, productivity declined 0.5% in the first quarter, after rebounding sharply in the previous quarter (+1.3%).
Overall, productivity rose in half of the 16 main industry sectors in the first quarter. Wholesale trade (+2.6%), agriculture and forestry (+2.0%) and utilities (+1.5%) recorded the largest gains, while real estate (-3.9%) posted the largest decline.
Hours worked rebound after a quarter of decline
Hours worked in the business sector rebounded 0.4% in the first quarter of 2025, following a 0.5% decline in the previous quarter.
The growth in hours worked in the first quarter reflects the 0.8% increase in the number of jobs, while hours worked per job decreased 0.4%.
In the first quarter, the growth in hours worked was mainly attributable to service-producing businesses (+0.6%), while hours worked in goods-producing businesses were essentially unchanged.
Overall, hours worked increased in 10 of the 16 main industry sectors and were essentially unchanged in accommodation and food services.
Unit labour costs decline for the first time in five quarters
Unit labour costs—that is, the cost of labour required to produce one unit of output—of businesses declined 0.3% in the first quarter, after increasing in the previous four quarters.
This decline observed in the first quarter reflects a marked slowdown in the growth of hourly compensation (from 1.6% in the fourth quarter of 2024 to a slight decrease of 0.1% in the first quarter of 2025), while productivity increased 0.2%.
Learn more about labour productivity
To learn more about productivity, the factors that influence it and why it matters for Canadians, listen to the Eh Sayers podcast episode, "Why economists are sounding the alarm on productivity."
Table 1: Business sector: Labour productivity and related variables for Canada – Seasonally adjusted
Sustainable Development Goals
On January 1, 2016, the world officially began implementing the 2030 Agenda for Sustainable Development—the United Nations' transformative plan of action that addresses urgent global challenges over the following 15 years. The plan is based on 17 specific Sustainable Development Goals (SDGs).
The release "Labour productivity, hourly compensation and unit labour cost" is an example of how Statistics Canada supports the reporting on the global SDGs. This release will be used to help measure the following goal:
Note to readers
Revisions
With this release, data were revised back to the first quarter of 2024 at the aggregate and industry levels. These data updates are consistent with those incorporated in the release on quarterly gross domestic product (GDP) by income and expenditure and the release on monthly GDP by industry, released on May 30, 2025.
This release also incorporates the new 2024 benchmark data on provincial and territorial labour productivity and related measures, published on May 20, 2025.
Productivity measures
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 GDP per hour worked.
Unit labour cost is defined as the cost of workers' wages and benefits per unit of real GDP.
The approach to measuring real output in the business sector differs from the one that is used in the estimates by industry. For the business sector, output is measured using the expenditure-based GDP approach at market prices, while the measure of output by industry is based on the value-added approach at basic prices.
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 in data tables.
All necessary basic variables for productivity analyses (such as hours worked, employment, output and compensation) are seasonally adjusted. For information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.
Reference
Data tables: 36-10-0206-01 and 36-10-0207-01.
- Note: some data tables may best be viewed on desktop.
Definitions, data sources and methods: survey number 5042.
Previous release: Labour productivity, hourly compensation and unit labour cost, fourth quarter 2024.
Next release: September 3, 2025.
Contact information
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