Labour productivity, hourly compensation and unit labour cost, first quarter 2023
First quarter 2023
Productivity declines for a fourth consecutive quarter
Labour productivity of Canadian businesses fell 0.6% in the first quarter, a similar decrease to that recorded in the previous quarter (-0.5%) and the fourth consecutive quarterly decline.
Business output resumed growth in the first quarter, following a contraction in the previous quarter. Meanwhile, growth in hours worked accelerated, after slowing in the previous quarter, and continued to outpace the growth in output.
In the first quarter, real gross domestic product of businesses rebounded 0.8%, following a 0.4% decline in the fourth quarter of 2022.
Growth in hours worked accelerates in the first quarter
Growth in hours worked in the business sector, which had reached 0.1% in the previous quarter, accelerated to 1.4% in the first quarter. This was the highest quarterly growth rate in hours worked since the fourth quarter of 2021 (+2.6%).
Growth in hours worked accelerated for both goods-producing (+1.5%) and service-producing (+1.3%) businesses, as the increase was widespread in all the main industry sectors. Only the information and cultural industries (-2.7%) and arts, entertainment and recreation (-1.4%) sectors recorded declines in hours worked in the first quarter, while retail trade was unchanged.
Productivity falls in both goods-producing businesses and service-producing businesses
Goods-producing businesses saw their productivity fall 1.4% in the first quarter, the second consecutive quarterly decline. Service-producing businesses, for their part, posted a 0.4% decrease in productivity, following a 0.3% increase in the previous quarter.
Overall, 12 of the 16 main industry sectors recorded decreases in the first quarter. Only arts, entertainment and recreation (+3.7%), information and cultural industries (+3.2%), accommodation and food services (+2.5%) and retail trade (+1.1%) posted increases in their productivity.
Unit labour costs rise for a fifth consecutive quarter
Unit labour costs—that is, the cost of labour per unit of output—of Canadian businesses rose for a fifth consecutive quarter, up 1.3% in the first quarter.
This increase in unit labour costs resulted from the combined effect of the growth in average compensation per hour worked (+0.7%) and the 0.6% decrease in productivity.
Business sector: Labour productivity and related variables for Canada and the United States – Seasonally adjusted
Labour productivity and related measures, by business sector industry, seasonally adjusted, first quarter 2023
Sustainable development goals
On January 1, 2016, the world officially began implementing the 2030 Agenda for Sustainable Development—the United Nations' transformative plan of action that addresses urgent global challenges over the following 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 sustainable development goals. This release will be used to help measure the following goal:
Note to readers
With this release, data were revised back to the first quarter of 2022 at the aggregate and industry levels. These revisions are consistent with those incorporated in the release on quarterly gross domestic product (GDP) by income and expenditure and the release on monthly GDP by industry, released on May 31, 2023.
This release also incorporates the new 2022 benchmark data on provincial and territorial labour productivity and related measures, published on May 19, 2023.
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.
The approach to measuring real output in the business sector differs from the one that is used in the estimates by industry. For the business sector, output is measured using the expenditure-based GDP approach at market prices. This approach is similar to that used for the quarterly measures of productivity in the United States. However, output by industry is based on the value added at basic prices.
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.
Labour productivity, hourly compensation and unit labour cost data for the second quarter of 2023 will be released on September 6.
The Economic accounts statistics portal, accessible from the Subjects module of the Statistics Canada website, features an up-to-date portrait of national and provincial economies and their structures.
The Latest Developments in the Canadian Economic Accounts (13-605-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The study, Canadian regional labour statistics and inter-regional movements of paid workers, 2001 to 2021, which is part of Latest Developments in the Canadian Economic Accounts (13-605-X), is now available.
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