Key facts
- Canadian business sector labour productivity fell 0.5% in Q1.
- This is the second straight quarterly drop, following a 0.3% decline in Q4.
- Unit labour costs increased by 1.4% in Q1.
- Unit labour costs are up 3.2% from a year ago.
- Goods-producing sectors saw a 1.7% decline in productivity.
- Services sectors saw a 0.3% increase in productivity.
Statistics Canada reported that Canadian business sector labour productivity fell 0.5% in the first quarter, marking the second consecutive quarterly decline after a revised 0.3% drop in the fourth quarter. This occurred as hours worked rose 0.4%, indicating businesses put in more effort for less output. Unit labour costs, a key metric for inflation, jumped 1.4% quarter-over-quarter and are up 3.2% year-on-year. The decline in productivity was led by goods-producing sectors, which fell 1.7%, with agriculture, forestry, fishing, and hunting seeing an 8.6% drop and construction down 2.3%. Services sectors showed a slight increase of 0.3%, with retail trade and transportation and warehousing performing well. The data suggests persistent productivity challenges in Canada and accelerating unit labour costs, complicating the Bank of Canada's monetary policy path.