Canadian Business Labour Productivity Rises at Slower Pace in Early 2025

Labour productivity in Canadian businesses rose by 0.2% in the first quarter of 2025, Statistics Canada reported on June 4, 2025. This is a slower pace than the 1.2% increase recorded in the previous quarter and marks two consecutive quarters of productivity growth for the first time since the start of the COVID-19 pandemic.

According to Statistics Canada, the modest rise in productivity coincided with a recovery in hours worked within the business sector following a previous quarter of decline. The overall business sector's real gross domestic product (GDP) grew by 0.6%, matching the pace of the previous quarter, while hours worked rose 0.4% after a 0.5% decrease in the fourth quarter of 2024. The increase in hours worked was largely due to a 0.8% rise in the number of jobs, even as the average hours worked per job fell by 0.4%.

Statistics Canada attributed the main source of productivity growth to goods-producing businesses, which showed a productivity increase of 0.8%, up from 0.3% in the previous quarter. Four out of five goods-producing sectors posted productivity gains. In contrast, service-producing businesses saw productivity decline by 0.5% after a 1.3% increase in the fourth quarter of 2024. Among the 16 main industry sectors, wholesale trade, agriculture and forestry, and utilities recorded the largest productivity gains, at 2.6%, 2.0%, and 1.5%, respectively. The real estate sector had the largest productivity decline at -3.9%.

Hours worked increased in 10 of the 16 main industry sectors. Service-producing businesses reported a 0.6% increase in hours worked, while hours worked in goods-producing businesses were essentially unchanged. Accommodation and food services showed little change in hours worked.

Unit labour costs, which measure the labour cost to produce one unit of output, declined by 0.3% in the first quarter of 2025—the first decline in five quarters. Statistics Canada stated that this decrease reflects a sharp slowdown in the growth of hourly compensation, which shifted from a 1.6% rise in the previous quarter to a 0.1% decrease.

All figures reported by Statistics Canada are seasonally adjusted. The agency noted that data for previous quarters have been revised to incorporate updated benchmarks, and the next release of productivity statistics is scheduled for September 3, 2025.