• Prior quarter 0.9% revised to 1.1%
• Labor productivity rate for Q4 -0.1% vs -0.1% estimate

Details of the report:

• Canadian business labour productivity fell -0.1% in Q4, as real GDP declined -0.2% while hours worked fell -0.1%.

• This follows a +1.1% productivity gain in Q3, when output rose while hours worked declined.

• The Q4 drop marks the second productivity decline in the last nine quarters.

Sector breakdown

• Goods-producing sector productivity fell -0.9% in Q4, after rising +1.8% in Q3.

• Services sector productivity rose +0.4%, following +0.6% growth in the prior quarter.

• Manufacturing and construction were the main drivers of the productivity decline.

• Information and cultural industries led productivity gains within services.

Hours worked

• Total hours worked in the business sector declined -0.1% in Q4, after a -0.2% drop in Q3.

• The Q3 decline was the first drop in hours worked since Q2 2020 (COVID onset).

• Hours worked in goods-producing industries rose +0.2%, though manufacturing fell -0.4%.

• Services-sector hours worked fell -0.2%, with declines in 8 of 11 industries.

• Administrative/support, waste management, and remediation services saw the largest drop (-2.4%).

Costs

• Hourly compensation rose +0.5% in Q4.

• Unit labour costs increased +0.7%, the fastest quarterly growth since Q1 2024.

• Unit labour costs measure the labour cost required to produce one unit of output.

Full-year 2025

• Labour productivity rose +1.1% in 2025, the second consecutive annual increase after three weak years.

• Business GDP grew +1.9% in 2025, similar to +1.8% growth in 2024.

• Growth in hours worked slowed to +0.8% in 2025, down from +1.1% in 2024, supporting productivity gains.

• Hourly compensation increased +2.3% in 2025.

• Unit labour costs rose +1.2% in 2025, the slowest annual increase since 2017

This article was written by Greg Michalowski at investinglive.com.



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