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

Released: 2018-12-04

Quarterly labour productivity

Third quarter 2018

0.3% increase

(quarterly change)

Labour productivity rises at a slower pace compared with the second quarter

Labour productivity of Canadian businesses increased 0.3% in the third quarter, following a 0.7% gain in the second quarter.

This slower growth in productivity reflected the slowdown in business output, while hours worked rose after posting no change in the previous quarter.

Chart 1  Chart 1: Growth in the productivity of Canadian businesses slows in the third quarter
Growth in the productivity of Canadian businesses slows in the third quarter

Real gross domestic product (GDP) of businesses rose 0.5% in the third quarter, after increasing 0.7% in the second quarter. Output growth in the third quarter was moderated by a decrease in goods-producing businesses (-0.2%), with declines in construction and mining, quarrying and oil and gas extraction. Growth of service-producing businesses (+0.7%) continued at a similar pace as the previous quarter.

Hours worked in the business sector edged up 0.2% in the third quarter, following no change in the second quarter. The 0.5% increase in hours worked in service-producing businesses more than offset the 0.5% decline in goods-producing businesses. Hours worked increased in 9 of the 16 main industry sectors. Arts, entertainment and recreation (+3.1%) and transportation and warehousing services (+1.6%) posted the largest gains. Conversely, agriculture and forestry (-3.7%), real estate services (-1.1%) and the mining, quarrying and oil and gas extraction sector (-1.0%) showed the largest decreases.

Productivity in goods-producing businesses rose 0.3%, following a 1.2% gain in the second quarter. Service-producing businesses grew 0.2%, after increasing 0.6% in the previous quarter.

Declines in arts, entertainment and recreation (-4.3%), construction (-1.9%), and transportation and warehousing services (-0.5%) and mining, quarrying and oil and gas extraction (-0.4%) moderated the overall growth in productivity in the third quarter. Finance and insurance and professional services were essentially unchanged. However, there were significant productivity gains in agriculture and forestry (+3.6%), real estate services (+2.3%) and manufacturing (+1.2%).

In the United States, labour productivity of businesses grew 0.5% after rising 0.9% in the previous quarter. Real GDP of American businesses (+1.0%) increased at a slower pace in the third quarter than in the second (+1.2%), while hours worked (+0.5%) increased at a similar pace (+0.4%).

Unit labour costs increase following a decline in the second quarter

Labour costs per unit of output in Canadian businesses increased 0.2% in the third quarter, after falling 0.6% in the second quarter.

The rise in unit costs was due to a 0.5% increase in the average compensation per hour worked, which exceeded the growth in productivity (+0.3%).

In the third quarter, hourly compensation grew 0.7% in goods-producing businesses and 0.4% in service-producing businesses. Agriculture and forestry (+3.1%) and real estate services (+2.6%) had the largest gains, while arts, entertainment and recreation (-0.9%) and transportation and warehousing services (-0.7%) posted the largest declines.

The average value of the Canadian dollar relative to the US dollar declined for a second consecutive quarter, down 1.2% in the third quarter. As a result, unit labour costs expressed in US dollars for Canadian businesses fell 1.0%, a second straight quarterly decline.

In comparison, unit labour costs of American businesses rose 0.3%, after falling 0.3% in the second quarter.


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 2013 at the aggregate and industry levels. 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 November 30, 2018.

This release also incorporates the revised annual benchmarks on the provincial and territorial economic accounts and provincial and territorial GDP by industry published on November 8, 2018. In addition, it takes into account the revised annual benchmarks on provincial and territorial labour productivity and related measures, published on February 16 and May 23, 2018.

Finally, the indexes of labour productivity and the related measures have been converted from reference year 2007 to reference year 2012. That change affects the data for the period from the first quarter of 1981 to the present. Adoption of the new 2012 reference year does not alter the growth rates of productivity and the related measures since it represents a scaling of indices based on 2007.

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 fourth quarter of 2018 will be released on March 6, 2019.

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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