Labour productivity, hourly compensation and unit labour cost, second quarter 2012

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The labour productivity of Canadian businesses fell 0.4% in the second quarter, after no change in the previous quarter. It was the first decline in a year.

Chart 1 
Real output of Canadian businesses increases less than hours worked
Chart 1: Real output of Canadian businesses increases less than hours worked

Chart description: Real output of Canadian businesses increases less than hours worked

CSV version of the chart

In the second quarter, Canadian businesses maintained the same rate of growth in real output as in the previous two quarters while increasing hours worked.

The real gross domestic product of businesses rose 0.5% in the second quarter, echoing the results observed in the previous two quarters. In contrast to the situation in the first quarter, goods-producing businesses significantly outperformed services-producing businesses in output growth in the second quarter.

At the same time, hours worked in the business sector continued their upward trend, increasing 0.9% in the second quarter. Two-thirds of the industry sectors posted gains during the quarter. Hours worked in goods-producing businesses rose 1.4%, after remaining flat the previous quarter, while hours worked in the services-producing industries were up 0.7%. Construction and the finance and insurance sector were largely responsible for the overall increase.

Both goods-producing businesses and services-producing businesses experienced declines in productivity in the second quarter.

In the goods-producing businesses, productivity fell 0.5% in the second quarter, the first decrease in a year. Except for agriculture (+0.6%), the productivity of each goods-producing industry declined in the second quarter. The sector's largest decline was in mining and oil and gas extraction (-2.3%).

In the services-producing businesses, productivity decreased 0.4% in the second quarter, after edging down 0.1% the previous quarter. The largest contributors to the decline were the finance and insurance (-1.6%) sector and transportation and warehousing services (-1.7%).

In the United States, the productivity of American businesses grew by 0.6% in the second quarter, after falling 0.2% in the first quarter.

In Canadian businesses, labour costs per unit of production were up for a third consecutive quarter, rising 0.7% in the second quarter.

The increase in unit labour costs in the second quarter reflected the 0.3% rise in hourly compensation combined with lower productivity. In the first quarter, the quarterly growth rate of hourly compensation in Canada was 0.5%.

After one quarter of appreciation, the average 0.9% decline in the value of the Canadian dollar relative to the American currency in the second quarter pushed Canadian businesses' unit labour costs in US dollars down 0.2%. It was the third decrease in the past four quarters.

By comparison, American businesses' unit labour costs were up 0.3% in the second quarter, after increasing 1.5% in the first quarter.

Note to readers

With this release, data were revised back to the first quarter of 2012 at the aggregate level and to the first quarter of 2011 at the industry level.

The historical revision to the Canadian National Accounts is scheduled for release beginning in October. For more information, consult the National economic accounts website.

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.

Available without charge in CANSIM: tables CANSIM table383-0008 and CANSIM table383-0012.

Definitions, data sources and methods: survey number survey number5042.

Additional tables and links to other releases from the national accounts can be found in the second quarter 2012 issue of Canadian Economic Accounts Quarterly Review, Vol. 11, no. 2 (Catalogue number13-010-X, free), available from the Key resource module of our website under Publications.

Labour productivity, hourly compensation and unit labour cost data for the third quarter will be released on December 7. Meanwhile, revised estimates of labour productivity for the second quarter, to be released on October 12, include the historical revision to aggregate labour productivity and underlying series (gross domestic product, hours worked, hourly compensation, unit labour costs, etc.) from 1981 to 2012. These updates will be consistent with the historical revision to the Canadian National Accounts, to be released on October 1.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Statistics Canada's National Contact Centre (toll-free 1-800-263-1136; 613-951-8116; or the Media Hotline (613-951-4636;