MRO Magazine

Labour cost per unit of output increased 1.2% in the first quarter


Ottawa – Labour productivity of Canadian businesses edged down 0.1% in the first quarter, following gains of 0.3% in each of the previous two quarters, according to the latest survey of productivity from Statistics Canada. This was the first decline in a year.

In the first quarter, the real output of businesses declined for the first time since 2011. There was also a decrease in the number of hours worked.

Real gross domestic product (GDP) of businesses fell 0.3% in the first quarter, the first decline since the second quarter of 2011. The decrease was mainly attributable to goods-producing businesses, which saw production decline following six consecutive quarterly increases. Production in service-producing businesses was unchanged following three quarters of growth.

Hours worked in the business sector were down 0.2% in the first quarter, following gains in the previous two quarters. Hours worked in goods-producing businesses decreased 1.1% in the first quarter, with most major industry sectors posting significant declines, particularly mining, quarrying, and oil and gas extraction. In contrast, the number of hours worked in service-producing businesses rose 0.2% during the quarter.

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In the first quarter, the 0.2% decline in productivity in service-producing businesses was partly offset by a 0.1% increase in productivity in goods-producing businesses.

Real estate services, wholesale trade as well as accommodation and food services posted the largest decreases in productivity. Construction and manufacturing also saw declines. Productivity was essentially unchanged in retail trade, transportation and warehousing as well as finance and insurance. During the first quarter, productivity increased in agriculture and forestry, mining, quarrying, and oil and gas extraction, utilities as well as arts, entertainment and recreation.

In the United States, the labour productivity of businesses fell 0.8% in the first quarter, following a 0.6% decline the previous quarter. This was the first time since 2006 that American productivity declined in two consecutive quarters. In the first quarter, the real GDP of American businesses was down 0.3% following a 0.7% increase in the previous quarter, while hours worked rose 0.5% following a notable 1.3% gain the previous quarter.

For Canadian businesses, labour cost per unit of output increased 1.2% in the first quarter, following little change in the previous three quarters.

The growth of average compensation per hour worked, which was 0.3% in the fourth quarter of 2014, accelerated to 1.1% in the first quarter of 2015.

In the first quarter, growth in hourly compensation increased at a similar pace for both goods- (+1.1%) and service-producing businesses (+1.2%). Hourly compensation was up for all major industrial sectors during the quarter.

In American dollars, the unit labour costs for Canadian businesses fell 7.4% in the first quarter, following a 4.2% decline in the previous quarter. The average value of the Canadian dollar relative to the American dollar decreased 8.5% during the quarter, a rate of depreciation more than twice that of the previous quarter.

By comparison, the unit labour costs of American businesses rose 1.6% following a 1.3% gain in the previous quarter.