Labor productivity of Canadian businesses edged up 0.1% in Q1 after increasing 0.7% in each of last two quarters, reflecting recovery of hours worked as businesses maintained same rate of real output growth

OTTAWA , June 8, 2012 (press release) – The labour productivity of Canadian businesses edged up 0.1% in the first quarter, after increasing 0.7% in each of the previous two quarters.

The slight productivity gain in the first quarter reflected the recovery of hours worked after a quarter of decline, as businesses maintained the same rate of real output growth as in the previous quarter.

The growth of the real gross domestic product of businesses was 0.5% in the first quarter, the same as in the fourth quarter of 2011. Services-producing businesses were the main contributors to the increase in output, as activity intensified in wholesale trade. Output for goods-producing businesses was unchanged from the previous quarter.

Hours worked in businesses grew 0.4% in the first quarter, after falling 0.2% in the previous quarter. Most of the increase in hours worked was in the services sector (+0.6%), as hours worked edged up 0.1% in goods-producing businesses.

There was little variation in the productivity of goods-producing businesses and services-producing businesses in the first quarter.

Productivity in the goods-producing businesses (-0.1%) decreased slightly in the first quarter, following two quarterly advances of more than 1.0%. The productivity gains in manufacturing (+0.8%) and construction (+0.4%) were not enough to offset declines in mining and oil and gas extraction (-0.9%) and agriculture, forestry, fishing and hunting (-0.3%).

Productivity in services-producing businesses posted a modest 0.1% increase. Productivity increases in wholesale trade (+1.1%), transportation and warehousing (+0.6%) and administrative services (+1.9%) were partly offset by declines in the other industries.

In the United States, business productivity fell 0.2% in the first quarter, its first decrease in a year.

In Canadian businesses, labour costs per unit of production were up 0.4% in the first quarter, after rising 0.8% in the previous quarter.

The growth of average compensation per hour worked, which was 1.5% in the fourth quarter of 2011, slowed to 0.5% in the first quarter, outpacing the modest growth of productivity. It was the second successive quarter in which hourly compensation in Canada grew faster than productivity.

After two quarters of depreciation, the average value of the Canadian dollar relative to the American currency was up 2.3% in the first quarter. Because of the appreciation, Canadian businesses' unit labour costs measured in US dollars rose 2.6%, their first increase in three quarters.

By comparison, unit labour costs in American businesses increased 0.3% after declining in the previous quarter.

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