Labour productivity, hourly compensation and unit labour cost, third quarter 2023
Released: 2023-12-06
Third quarter 2023
-0.8% 
(quarterly change)
Productivity declines for a sixth consecutive quarter
Labour productivity of Canadian businesses decreased 0.8% in the third quarter, after edging down 0.1% in the previous quarter. This was a sixth consecutive quarterly decline.
Chart 1
Business productivity declines 0.8% for the third time in the last four quarters
The decline in productivity in the third quarter mainly reflects the contraction in business output observed after two quarters of growth, while hours worked increased slightly.
In the third quarter, real gross domestic product of businesses contracted 0.7%, after having grown 0.3% in the second quarter and 0.5% in the first quarter.
Little change in hours worked in the third quarter
Hours worked in the business sector, which had increased 0.4% in the second quarter, varied little in the third quarter, edging up 0.1%. This was the lowest quarterly growth rate in 13 quarters.
This slight growth in hours worked reflects the 0.1% increase in average hours worked, while the number of jobs was unchanged.
Hours worked in services-producing businesses rose during the third quarter, up 0.2%, while those in goods-producing businesses edged down 0.1%. Overall, hours worked increased in half of the 16 industry sectors and were unchanged in accommodation and food services.
Wildfires continued to affect certain economic regions of Canada in July 2023. This contributed to a 0.01% reduction in the quarterly change in hours worked in the business sector.
Wildfires in certain economic regions across the country: Impact on hours worked used to measure productivity, July 2023
In June 2023, Statistics Canada added questions to the Labour Force Survey (LFS) on the number of work hours lost and the number of overtime hours worked, due to the wildfires affecting certain economic regions of the country. Data from these added questions were for the month prior to the regular survey month.
Data from these questions allowed Statistics Canada to adjust the estimates of hours worked and related measures (including labour productivity). For the August 2023 reference month, these additional questions were removed from the September 2023 LFS questionnaire. Therefore, Statistics Canada no longer uses this monthly information as of August 2023, as the number of fires across the country was in decline.
Over the month of July 2023, 1.6 million hours of work were lost in the business sector, while 646,000 additional hours were worked. As a result, for the third quarter, the net effect was a loss of 944,000 hours. This was a much smaller loss than that recorded in the previous quarter (-2.4 million hours).
Productivity falls in both goods-producing and services-producing businesses
In the third quarter, both goods-producing businesses (-0.9%) and services-producing businesses (-0.4%) posted a decline in their productivity, mainly due to decreases in the retail trade, manufacturing, and agriculture and forestry sectors.
In total, productivity fell in 10 of the 16 main industry sectors, while it was virtually unchanged (+0.1%) in mining and oil and gas extraction, construction, and real estate services.
Business unit labour costs increase at the same pace as in the previous quarter
Unit labour costs—that is, the costs of wages and benefits a business pays its workers to produce one unit of output—increased 1.6% in the third quarter. This is the same growth rate as in the second quarter.
This increase in unit labour costs is attributable to the combined effect of the slowdown in growth in average compensation per hour worked (from 1.5% in the second quarter to 0.8% in the third quarter) and the decline in productivity (-0.8%), which was more pronounced than in the previous quarter.
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Sustainable development goals
On January 1, 2016, the world officially began implementing the 2030 Agenda for Sustainable Development—the United Nations' transformative plan of action that addresses urgent global challenges over the following 15 years. The plan is based on 17 specific sustainable development goals.
The release "Labour productivity, hourly compensation and unit labour cost" is an example of how Statistics Canada supports the reporting on the global sustainable development goals. This release will be used to help measure the following goal:
Note to readers
Revisions
With this release, data were revised back to the first quarter of 1981 at the aggregate level and to the first quarter of 1997 at the industry level.
These historical revisions reflect the incorporation of revised data from different sources, as well as the change in the reference year from 2012 to 2017 for real output measures. In particular, the revisions are consistent with those incorporated in the quarterly gross domestic product (GDP) by income and expenditure and the monthly GDP by industry, released on November 30, 2023.
Change of reference year for indexes of labour productivity and related measures to 2017=100
The indexes of labour productivity and related measures have also been converted from reference year 2012 to reference year 2017. As a result, all indexes were revised historically. Revisions to growth rates in productivity and related measures affected only the most recent periods.
Productivity measures
The term productivity in this release refers to labour productivity. For the purposes of this analysis, labour productivity and related variables cover the business sector only.
Labour productivity is a measure of real GDP per hour worked.
Unit labour cost is defined as the cost of workers' wages and benefits per unit of real GDP.
The approach to measuring real output in the business sector differs from the one that is used in the estimates by industry. For the business sector, output is measured using the expenditure-based GDP approach at market prices. This approach is similar to that used for the quarterly measures of productivity in the United States. However, output by industry is based on the value added at basic prices.
All the growth rates reported in this release are rounded to one decimal place. They are calculated with index numbers rounded to three decimal places, which are now available in data tables.
All necessary basic variables for productivity analyses (such as hours worked, employment, output and compensation) are seasonally adjusted. For information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.
Next release
Labour productivity, hourly compensation and unit labour cost data for the fourth quarter of 2023 will be released on March 6, 2024.
Products
The Economic accounts statistics portal, accessible from the Subjects module of the Statistics Canada website, features an up-to-date portrait of national and provincial economies and their structures.
The Latest Developments in the Canadian Economic Accounts (13-605-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The study, Canadian regional labour statistics and inter-regional movements of paid workers, 2001 to 2021, which is part of Latest Developments in the Canadian Economic Accounts (13-605-X), is now available.
Contact information
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