Canada’s fourth quarter labour productivity dipped: StatsCan
Canada’s already struggling labour productivity took another hit in the fourth quarter of last year, dipping by 0.1 per cent.
Canada’s already struggling labour productivity took another hit in the fourth quarter of last year, dipping by 0.1 per cent, as businesses cut back on work hours slower than the economy shrank, according to the latest figures from Statistics Canada.
“Overall, manufacturing and construction were the main contributors to the decrease in business sector productivity in the fourth quarter,” wrote the government agency on Wednesday. “Meanwhile, services-producing businesses, led by information and cultural industries, contributed the most to labour productivity growth in the quarter.”
The decline follows a quarter-over-quarter increase in the third quarter of 2025.
The decrease was most observed in goods-producing businesses (down 0.9 per cent) but was partially offset by growth in services-producing businesses (up 0.4 per cent).
However, the fourth quarter also saw the second consecutive decline in hours worked in the business sector. The Q3 decrease was the first decline in hours worked since the second quarter of 2020 at the onset of the COVID-19 pandemic.
“As labour productivity edged down in the fourth quarter, the 0.5 per cent rise in hourly compensation resulted in a 0.7 per cent growth in unit labour costs to businesses. This was the fastest pace of quarterly growth since the first quarter of 2024,” it said.
“In 2025, growth in real gross domestic product of businesses (+1.9 per cent) maintained a similar pace to that of the previous year (+1.8 per cent). Meanwhile, growth in hours worked further decelerated from 1.1 per cent in 2024 to 0.8 per cent in 2025, contributing to the annual increase in labour productivity.”
The agency noted that with increased productivity last year, the 2.3 per cent increase in hourly compensation resulted in actual growth of only 1.2 per cent in unit labour costs to businesses.
“This was the lowest annual growth rate for unit labour costs since 2017,” it said.