Canadian businesses saw a slight decline in labour productivity for the second consecutive quarter, according to new data from Statistics Canada. Labour productivity dipped by 0.2% in the second quarter of 2024, following a 0.3% decrease in the first quarter.
This decline comes as business output and hours worked both increased slightly faster than in the previous quarter. However, the growth in output, which rose by 0.5%, lagged just behind the 0.6% rise in hours worked, contributing to the overall productivity decline.
The second-quarter growth in output represents the highest quarterly increase since the first quarter of 2023, which saw a 0.9% gain.
The uptick in hours worked, up from 0.4% in the first quarter to 0.6%, was driven by a 0.7% increase in the number of jobs. Average hours worked remained stable, dipping by 0.1%.
Productivity in the business sector was primarily dragged down by service-producing businesses, which saw a 0.3% decline. The information and cultural industries, real estate services, and professional services posted the most significant declines, with productivity in those sectors dropping by 2.1%, 1.5%, and 0.9%, respectively.
On the other hand, goods-producing businesses managed a slight productivity gain of 0.1%, thanks to a 1.8% increase in the mining and oil and gas extraction sector, which offset declines in other goods sectors.
Overall, productivity declined in 11 of the 16 main industry sectors in the second quarter.
Despite the drop in productivity, unit labour costs—defined as the cost of wages and benefits per unit of output—increased by 0.8%, a slower pace than the 1.3% rise recorded in the previous quarter. This moderation was largely due to slower growth in hourly compensation, which rose by 0.6% in the second quarter, down from 1.0% in the first quarter.