Labour productivity of Canadian businesses declined for a second consecutive quarter.
Ottawa – Statistics Canada reports that the labour productivity of Canadian businesses declined 0.6% in the second quarter of 2015, following a 0.5% decrease in the first quarter.
In the second quarter, the output of businesses decreased at a rate similar to the first quarter, while hours worked continued to increase.
Real gross domestic product (GDP) of businesses declined 0.3% in the second quarter, following a 0.4% decrease in the first quarter. The decline in the second quarter was mainly attributable to goods-producing businesses, where output fell significantly. In contrast, the output in service-producing businesses advanced 0.8%, after no growth in the first quarter.
At the same time, hours worked in the business sector (+0.3%) increased for a fourth straight quarter. Hours worked increased 0.5% in goods-producing businesses and 0.2% in service-producing businesses. Hours worked were up in 11 of the 16 major industrial sectors. Decreases were recorded in mining, quarrying, and oil and gas extraction (-2.4%), utilities (-1.4%), finance and insurance (-0.5%), retail trade (-0.5%) and transportation and warehousing (-0.4%).
Productivity in service-producing businesses was up 0.6% in the second quarter, while it was down 2.5% in goods-producing businesses. In the first quarter, a 0.5% decline was observed in both service- and goods-producing businesses.
In the second quarter, the decline of productivity in the business sector as a whole was mainly the result of productivity declines in construction (-2.3%), mining, quarrying, and oil and gas extraction (-2.2%) and manufacturing (-1.4%). Productivity was up in every service industry sector except information and cultural industries (-1.0%), professional services (-0.9%) and administrative services (-0.5%).
In the United States, labour productivity of businesses grew 0.9% in the second quarter, after declining for two consecutive quarters. Real GDP of American businesses rose 1.1% in the second quarter, after edging up 0.1% in the first quarter. At the same time, hours worked rose 0.3%, after increasing 0.5% in the first quarter.
For Canadian businesses, the decrease in productivity was larger than the decline in hourly compensation (-0.2%) in the second quarter. As a result, the labour cost per unit of output for Canadian businesses was up 0.4% in the second quarter, after increasing 1.3% in the first quarter. Hourly compensation decreased 0.2% in both the goods- and service-producing businesses. Arts, entertainment and recreation as well as mining, quarrying, and oil and gas extraction posted the largest declines.
After two quarters of depreciation, the average value of the Canadian dollar relative to the American dollar rose 0.9% in the second quarter. Given this appreciation, the unit labour cost in American dollars for Canadian businesses was up 1.4%, the first increase in three quarters.
By comparison, the unit labour cost of American businesses decreased 0.3%, following a 0.6% gain in the first quarter.