Number of hours worked plummets in first quarter of 2009
Ottawa, ON -- The labour productivity of Canadian businesses rose 0.3% in the first quarter of 2009, in a context...
Ottawa, ON — The labour productivity of Canadian businesses rose 0.3% in the first quarter of 2009, in a context of sharply lower output and hours worked. In addition, the decline in unit labour costs in Canadian businesses in US dollars continued for a third consecutive quarter, as their costs decreased by 1.8% in the first quarter. These results are based on the latest Statistics Canada survey of labour productivity, hourly compensation and unit labour cost.
In the first quarter, the real gross domestic product (GDP) of Canadian businesses and hours worked related to this production were both down sharply, posting the largest quarterly declines since the first quarter of 1991.
The downward movement in hours worked accelerated in the first quarter (-2.2%) compared with the fourth quarter of 2008 (-1.3%). The decline in hours worked in the business sector more than offset the decrease in output in the first quarter.
Productivity in the goods sector grew 1.7% in the first quarter, despite a further decline in manufacturing, and was partly counterbalanced by a 0.5% productivity decrease in the services sector.
Over the last two quarters, productivity has followed much the same pattern in Canada and the United States. American businesses had a 0.4% gain in productivity in the first quarter, after a 0.1% decline the previous quarter.
Labour costs per unit of production in Canadian dollars rose by 0.8% for Canadian businesses in the first quarter. That was slightly less than half the rate of 1.7% registered in the previous quarter.
This improvement is attributable to a modest gain in productivity and slower growth in hourly compensation, which moderated from 1.5% in the last quarter of 2008 to 1.2% in the first quarter.
Because of the 2.7% depreciation in the Canadian dollar relative to its American counterpart, Canadian unit labour costs measured in US dollars were down for the third consecutive quarter, falling 1.8% in the first quarter. This decline was much smaller than in the fourth quarter, when the Canadian dollar dropped significantly in value.
Note: The term ‘productivity’ in this release refers to labour productivity. For the purposes of this analysis, labour productivity, gross domestic product (GDP) and unit labour cost 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 first quarter 2009 labour productivity data include revisions to aggregate labour productivity and underlying series (GDP, hours worked, unit labour costs, etc.) from 2005 to 2008. These updates are consistent with the four-year annual revision to the National Income and Expenditure Accounts released June 1, 2009. However, Statistics Canada reports that the national accounts’ data of GDP by industry will not be revised until the end of September 2009 (the usual revision release date for GDP by industry) and therefore will not be incorporated in the productivity data until the release of the third-quarter data in December 2009. For details, visit www.statcan.gc.ca.