Ottawa – Labour productivity of Canadian businesses edged down 0.1% in the first quarter of 2014, following a 1.0% gain in the fourth quarter of 2013, according to Statistics Canada. It was the first decline since the third quarter of 2012.
Businesses continued to increase their output in the first quarter, but at a slower pace than in the previous four quarters, while hours worked rebounded following one quarter of decline.
Real gross domestic product (GDP) of businesses increased by 0.3%, compared with an average quarterly growth of 0.8% for the four quarters of 2013. Output in both goods-producing and service-producing businesses continued to rise, but at a slower rate than in the previous two quarters. The largest contributor to the first-quarter advance was the mining and oil and gas extraction sector.
At the same time, hours worked in the business sector were up 0.4%, after decreasing 0.3% in the fourth quarter of 2013. Hours worked in service-producing businesses rose 0.6%, after edging up 0.1% in each of the previous two quarters. Conversely, hours worked in goods-producing businesses (-0.2%) continued to decline, albeit at a much slower pace than in the previous quarter.
The overall productivity decline in the first quarter was due to falling productivity in service-producing businesses.
Productivity in goods-producing businesses grew by 0.8% in the first quarter, mainly because of a 1.1% increase in construction. This advance was more than offset by the 0.4% decline in the productivity of service-producing businesses. Productivity was down in every service-producing industry during the quarter except real estate services (+2.6%), information and cultural industries (+0.8%) and the finance and insurance sector (+0.5%).
By comparison, productivity of American businesses decreased 0.9% in the first quarter. This was the largest decrease since the first quarter of 2008.
For Canadian businesses, labour costs per unit of production rose 0.5% in the first quarter, the same rate as in the previous quarter.
The growth of average compensation per hour worked, which was 1.5% in the fourth quarter of 2013, slowed to 0.4% in the first quarter. All major industry sectors experienced slower growth in hourly compensation in the first quarter than in the previous quarter except real estate services (+4.1%), the finance and insurance sector (+2.3%) and information and cultural industries (+2.0%).
In the first quarter, the unit labour costs of Canadian businesses in American dollars posted their largest decline (-4.4%) in five quarters. The average value of the Canadian dollar relative to the US dollar registered its largest decrease (-4.9%) in five quarters of depreciation.
By comparison, the unit labour costs of American businesses were up 1.5%, after two quarters of declines.