Labour productivity plunges to lowest point in three years
Bad news for Canada’s economy: worker productivity just took a nosedive, hitting its lowest point in three years this past quarter, according to new data from Statistics Canada.
Bad news for Canada’s economy: worker productivity just took a nosedive, hitting its lowest point in three years this past quarter, according to new data from Statistics Canada.
“Labour productivity of Canadian businesses declined 1.0 per cent in the second quarter. This decline followed a nearly flat variation in the first quarter, which had followed a strong increase of 1.2 per cent in the fourth quarter of 2024. The last time productivity declined so sharply was in the fourth quarter of 2022 (-1.1 per cent),” reads the data.
“With uncertainty surrounding international trade, businesses reduced their output for the first time in seven quarters in the second quarter of 2025. At the same time, hours worked continued to increase but at half the pace of the previous quarter.”
Canada’s real gross domestic product for businesses contracted 0.7 per cent in the second quarter, following a 0.5 per cent increase in the previous quarter.
The decline resulted in an annual rate of 1.6 per cent, offsetting many economists’ predictions that Canada’s GDP would have fared better.
The Q2 drop marked the first since the third quarter of 2023, when it contracted 0.4 per cent.
The business sector saw productivity decline in nine of 16 industry sectors.
The most significant declines were recorded in utilities (-4.0 per cent) and wholesale trade (-2.6 per cent).
Manufacturing and construction also saw declines.
Overall, manufacturing and wholesale trade were the main contributors to the decrease in business sector productivity in the second quarter,” reads the report published last week.
“These two sectors—which are heavily dependent on merchandise trade—were particularly affected by the uncertainty surrounding Canada’s trade activities with the United States during the quarter.”
Canada’s productivity is now ranked among the lowest in the G7.
Worker productivity? Clearly that must be hard to define. But, as the percentage of workers on the take (civil servants) rises, the load on the system of progress, would definitely suffer as the overhead increases to carry the civil service.