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Productivity

Labour productivity, hourly compensation and unit labour cost for third quarter 2015

Ottawa - Labour productivity of Canadian businesses edged up 0.1% in the third quarter, following two consecutive quarterly declines. Real gross domestic product (GDP) of businesses resumed growth in the third quarter, following two straight quarters of decline, while hours worked increased at a similar pace to that of the previous quarter.

Real GDP of businesses rose 0.7% in the third quarter, following declines in the first (-0.4%) and second (-0.3%) quarters. Both goods-producing and service-producing businesses increased their output in the third quarter. Mining, quarrying, and oil and gas extraction were the main contributors to the growth.

Hours worked devoted to production in the business sector rose 0.6% in the third quarter, matching the increase of the second quarter. The gain in the third quarter was attributable to service-producing businesses (+1.1%). The increase was widespread in all the main service industrial sectors, led by arts, entertainment and recreation (+3.5%). In contrast, hours worked in goods-producing businesses declined 0.5%, after advancing 0.5% the previous quarter.

Goods-producing businesses (+1.4%) were the main contributor to productivity growth in the business sector in the third quarter, following a substantial 2.5% decline in the second quarter. The increase was widespread, with the largest gains in mining and oil and gas extraction (+6.4%), agriculture and forestry (+1.9%) as well as manufacturing (+0.7%). Utilities and construction posted modest gains.

In service-producing businesses, productivity declined 0.7% in the third quarter after being stable in the previous quarter. Productivity was down in every major service industry sector except real estate services (+1.1%). The largest declines were in information and cultural industries (-2.4%), wholesale trade (-2.0%), arts, entertainment and recreation (-2.0%) and professional services (-1.5%).

In the United States, the labour productivity of businesses rose 0.7% in the third quarter, following a 0.9% increase in the second quarter. Real GDP of American businesses rose 0.6% in the third quarter, while hours worked (-0.1%) decreased for the first time since the third quarter of 2009. In the second quarter, real GDP (+1.2%) and hours worked (+0.3%) in American businesses increased.

For Canadian businesses, the labour cost per unit of output decreased 0.5% in the third quarter, after increasing the two previous quarters.

The average compensation per hour worked (-0.4%) declined for the second straight quarter, down 0.7% in goods-producing businesses and down 0.1% in service-producing businesses in the third quarter. Significant declines were observed in arts, entertainment and recreation, information and cultural industries, manufacturing as well as transportation and warehousing services. Construction was also down.

In American dollars, the unit labour cost of Canadian businesses fell 6.6% in the third quarter, after increasing 1.3% the previous quarter. The average value of the Canadian dollar relative to the American dollar decreased 6.0% during the quarter, after rising 0.9% in the second quarter.

By comparison, the unit labour cost of American businesses was up 0.3%, after increasing 0.5% the previous quarter.

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