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Labour productivity, hourly compensation and unit labour cost, second quarter 2018

Released: 2018-09-05

Quarterly labour productivity

Second quarter 2018

0.7% increase

(quarterly change)

Labour productivity rises following a decline in the first quarter

Labour productivity of Canadian businesses rose 0.7% in the second quarter, the highest growth since the first quarter of 2017 (+1.4%). This follows a 0.3% decrease in the first quarter.

Chart 1  Chart 1: Productivity of Canadian businesses rebounds in the second quarter
Productivity of Canadian businesses rebounds in the second quarter

The productivity rebound in the second quarter reflected an acceleration of growth in business output, while hours worked were essentially unchanged.

Real gross domestic product (GDP) of businesses rose 0.7% in the second quarter, after increasing 0.3% in the first quarter. Growth in the real GDP of businesses accelerated for both goods-producing and service-producing businesses. Mining, quarrying, and oil and gas extraction was the main source of the overall gain, with professional services, wholesale trade, retail trade and transportation and warehousing services also contributing.

The increase in hours worked in the business sector slowed to 0.1% in the second quarter, following a 0.5% increase in the first quarter. The growth in hours worked in service-producing businesses (+0.3%) more than offset the decline in hours worked in goods-producing businesses (-0.5%). Hours worked increased in 7 of the 16 main industry sectors, while 2 were unchanged. Professional services (+2.5%) and administrative services (+2.4%) had the largest gains, while arts, entertainment and recreation (-2.0%) and transportation and warehousing services (-1.6%) reported the largest declines.

Productivity growth accelerated for both goods-producing and service-producing businesses in the second quarter.

Productivity in goods-producing businesses rose 1.7% following a flat first quarter. The mining, quarrying, and oil and gas extraction sector (+3.6%) contributed the most to the gain, as both crude petroleum and natural gas extraction activities increased. Productivity also grew in construction (+2.0%) and manufacturing (+0.4%).

Following a 0.3% decline in the first quarter, productivity in service-producing businesses rose 0.5%, led by notable increases in transportation and warehousing services (+2.8%), other business services (+2.5%), arts, entertainment and recreation (+2.0%), retail trade (+1.7%) and real estate (+1.5%).

In the United States, the labour productivity of businesses grew 0.9% in the second quarter, after edging up 0.1% in the first quarter. This was the largest quarterly growth rate since the fourth quarter of 2009 (+1.4%). Real GDP of American businesses rose 1.2%, twice the growth rate of the first quarter and the largest increase since the third quarter of 2014 (+1.6%). Over the same period, hours worked rose 0.3%, following a 0.5% increase in the first quarter.

Unit labour costs decline for the first time in four quarters

Following three consecutive quarterly increases, labour costs per unit of output in Canadian businesses fell 0.4% in the second quarter.

The decline in unit costs in the second quarter was due to a 0.3% increase in the average compensation per hour worked, which was well below the growth in productivity (+0.7%).

In the second quarter, hourly compensation rose 0.8% in goods-producing businesses and edged up 0.1% in service-producing businesses. Hourly compensation increased in 11 of the 16 industry sectors. The largest increases were in transportation and warehousing services (+2.3%), information and cultural industries (+2.2%) and arts, entertainment and recreation (+2.1%), while the largest declines were in finance and insurance (-2.0%) and administrative services (-2.0%).

After edging up 0.6% in the first quarter, the average value of the Canadian dollar relative to the US dollar decreased 2.1% in the second quarter. Given this depreciation, unit labour costs expressed in US dollars for Canadian businesses fell 2.4%, after increasing 1.3% in the first quarter.

By comparison, American businesses saw their unit labour costs decline 0.3% in the second quarter, following a 0.9% increase in the first quarter. This was the lowest rate since the third quarter of 2014 (-0.4%).


Sustainable Development Goals

On January 1, 2016, the world officially began implementation of the 2030 Agenda for Sustainable Development—the United Nations' transformative plan of action that addresses urgent global challenges over the next 15 years. The plan is based on 17 specific sustainable development goals.

The release "Labour productivity, hourly compensation and unit labour cost" is an example of how Statistics Canada supports the reporting on the Global Goals for Sustainable Development. This release will be used in helping to measure the following goal:

  Note to readers

Revisions

With this release on labour productivity and related measures, data were revised back to the first quarter of 2018 at the aggregate level and to the first quarter of 2017 at the industry level. These revisions are consistent with those incorporated in the quarterly gross domestic product (GDP) by income and expenditure and monthly GDP by industry, published on August 30, 2018.

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.

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.

Next release

Labour productivity, hourly compensation and unit labour cost data for the third quarter will be released on December 4.

Products

The Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is available.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

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; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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