Labor productivity of Canadian businesses edged down 0.1% in Q1, the first decline since Q3 2012; businesses continued to increase output in Q1 but at slower pace than previous four quarters: Statistics Canada

OTTAWA , June 6, 2014 (press release) – 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 
Real output of Canadian businesses increases at a slightly slower pace than hours worked

Chart description: Real output of Canadian businesses increases at a slightly slower pace than hours worked

CSV version of chart 1

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.

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