Ottawa – Labour productivity in Canadian businesses rose 1.0% in the fourth quarter of 2013, following a 0.3% gain in the third quarter. This was the fourth consecutive quarterly increase for 2013 and the highest growth rate since the first quarter of 2010 (+1.2%).
The real gross domestic product (GDP) of businesses grew 0.7% in the fourth quarter, echoing the results observed in the previous two quarters. Output was up in almost every major industry group in the business sector. For a second consecutive quarter, the output growth of goods-producing businesses was comparable to that of service-producing businesses.
At the same time, hours worked in the business sector fell 0.2% in the fourth quarter, after increasing 0.4% in the third quarter. Goods-producing businesses, particularly construction, were largely responsible for this decrease in hours worked, which contrasts with the situation in the previous quarter. Hours worked in service-producing businesses edged up 0.1% for a second consecutive quarter.
Both goods-producing businesses and service-producing businesses contributed to the overall productivity gain in the fourth quarter.
Productivity in goods-producing businesses increased 1.7% in the fourth quarter, after falling 0.3% in the previous quarter. Construction (+2.0%) contributed the most to the increase, while productivity also grew in utilities (+3.0%) and manufacturing (+0.6%).
Productivity in service-producing businesses rose 0.5%, a fifth straight quarterly advance. Arts and entertainment (+7.2%), finance and insurance (+0.9%), administrative services (+1.6%) and wholesale trade (+0.7%) were mainly responsible for this growth.
In comparison, the productivity of US businesses increased 0.7% in the fourth quarter, a gain similar to the one observed in the third quarter.
In Canadian businesses, labour costs per unit of production were up 0.4% in the fourth quarter, as the increase in average compensation per hour worked (+1.4%) outpaced productivity growth.
However, in US dollars, the unit labour costs of Canadian businesses fell 0.6%, a fourth consecutive quarterly decline. The average value of the Canadian dollar relative to the US dollar decreased 1.0% during the quarter, marking a fourth consecutive quarter of 1.0% depreciation or more.
By comparison, the unit labour costs of American businesses declined 0.3%, after falling 0.5% in the third quarter.
Labour productivity in Canadian businesses rose 1.0% in 2013, after remaining flat in 2012. In comparison, productivity growth in American businesses was also up 1.0% in 2013.
Canadian businesses increased their real output (+2.1%) at a slightly faster pace in 2013 than in 2012, while hours worked (+1.1%) continued to rise, albeit at a slower pace than in each of the three previous years.
In 2012, the real GDP of businesses (+1.7%) and hours worked (+1.8%) both grew at a comparable rate.
For 2013 as a whole, productivity increased in both goods-producing businesses (+0.5%) and service-producing businesses (+1.2%). With the exception of construction, manufacturing, wholesale trade and real estate services, productivity was up in every industry group in the business sector in 2013.
With hourly compensation (+2.4%) rising at a faster pace than productivity in 2013, the unit labour costs of Canadian businesses increased 1.3% in 2013 compared with a 3.0% gain in 2012.
However, the Canadian dollar was down an average of 3.0% in relation to the US dollar. Consequently, in American dollars, the unit labour costs of Canadian businesses fell 1.7% in 2013. In comparison, the unit labour costs of US businesses increased 0.8% in 2013.