Labour productivity, hourly compensation and unit labour cost, fourth quarter 2025
Released: 2026-03-04
Fourth quarter 2025
-0.1% 
(quarterly change)
Productivity edges down in the fourth quarter
The labour productivity of Canadian businesses edged down 0.1% in the fourth quarter as hours worked declined at a slower pace than real gross domestic product (-0.2%). This contrasts with the previous quarter in which labour productivity rose 1.1% as output increased with fewer hours worked.
The fourth quarter decrease in business labour productivity was the second quarterly decline in the last nine quarters.
Chart 1
Business output declines as hours worked edge down
Goods-producing businesses contribute to overall decline in productivity
In the fourth quarter, the productivity decline in goods-producing businesses (down 0.9% after an increase of 1.8% in the previous quarter) was partially offset by productivity growth in services-producing businesses (up 0.4% following an increase of 0.6% in the previous quarter).
Overall, manufacturing and construction were the main contributors to the decrease in business sector productivity in the fourth quarter. Meanwhile, services-producing businesses, led by information and cultural industries, contributed the most to labour productivity growth in the quarter.
Hours worked record a slight decline
Hours worked in the business sector edged down 0.1% in the fourth quarter following a decline in the third quarter. The third quarter decrease was the first decline in hours worked (-0.2%) since the second quarter of 2020 (-19.7%) at the onset of the COVID-19 pandemic.
Hours worked in goods-producing businesses grew 0.2% in the fourth quarter of 2025, with all industry sectors registering an increase in hours worked, except for manufacturing (-0.4%). This was offset by a 0.2% decline in hours worked in the services-producing businesses. Decreases were seen in 8 of the 11 industry sectors, led by administrative and support, waste management and remediation services (-2.4%).
Growth in unit labour costs accelerates in the fourth quarter
As labour productivity edged down in the fourth quarter, the 0.5% rise in hourly compensation resulted in a 0.7% growth in unit labour costs to businesses. This was the fastest pace of quarterly growth since the first quarter of 2024.
Unit labour costs represent the labour costs required to produce one unit of output.
Labour productivity in 2025
While labour productivity of businesses fluctuated throughout the year, amid trade uncertainties and a weakening labour market, it was up 1.1% overall in 2025, due to strong growth in the third quarter. The 2025 increase was the second consecutive annual rise in labour productivity following three years of weak growth.
In 2025, growth in real gross domestic product of businesses (+1.9%) maintained a similar pace to that of the previous year (+1.8%). Meanwhile, growth in hours worked further decelerated from 1.1% in 2024 to 0.8% in 2025, contributing to the annual increase in labour productivity.
With productivity up in 2025, the 2.3% increase in hourly compensation during the year resulted in growth of 1.2% in unit labour costs to businesses.
This was the lowest annual growth rate for unit labour costs since 2017.
Learn more about labour productivity
To learn more about productivity, the factors that influence it and why it matters for Canadians, listen to the Eh Sayers podcast episode, "Why economists are sounding the alarm on productivity."
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 (SDGs).
The release "Labour productivity, hourly compensation and unit labour cost" is an example of how Statistics Canada supports the reporting on the global SDGs. This release will be used to help measure the following goal:
Note to readers
Revisions
With this release, the data were revised back to the first quarter of 1997 at the aggregate and industry levels for consistency. These data further incorporate the latest quarterly gross domestic product (GDP) by income and expenditure and monthly GDP by industry, released on February 27, 2026.
In addition, all index series at the aggregate level were subject to revision going back to 1981, as a result of methodological improvements to the coherence between the aggregate and industry level data.
Finally, the data in this release do not reflect the recent revisions to the Labour Force Survey (LFS) data released on January 26, 2026. These historical revisions of the LFS data will be incorporated in the next release on June 3, 2026.
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.
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, while the measure of output by industry is based on the value-added approach 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.
Next release of quarterly data
Labour productivity, hourly compensation and unit labour cost data for the first quarter of 2026 will be released on June 3, 2026.
Next release of annual data
The release of revised data on hours worked and labour productivity in the provinces and territories, which was initially scheduled for February 9, 2026, has been postponed to May 20, 2026. Revised data will incorporate new benchmark data from the Supply and Use Tables for the reference year 2022, as well as the adoption of the North American Industry Classification System 2022.
Products
The document "Labour productivity measurement at Statistics Canada," which is part of Latest Developments in the Canadian Economic Accounts (13-605-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 available.
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.
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; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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