Labour productivity growth dropped sharply in the first quarter, according to new data from Statistics Canada.
The national statistical agency reported that labour productivity improved by just 0.2% in the first quarter, which was a significant slowdown from the 1.2% growth rate posted in the previous quarter.
In the first quarter, hours worked increased by 0.4%, partially reversing a 0.5% decline in the fourth quarter of 2024.
However, real GDP grew by 0.6% in the quarter, outpacing the growth in hours worked, Statistics Canada noted.
The increase in productivity was driven by the goods sector, which saw productivity rise by 0.8% in the first quarter, while services sector productivity declined by 0.5% in the first quarter.
Overall, productivity rose in half of the 16 main industry sectors in the first quarter, the report noted — led by gains in the wholesale trade, agriculture and forestry, and utilities sectors.
Finally, the data also showed that unit labour costs declined by 0.3% in the first quarter — the first drop in the past five quarters.
“This decline observed in the first quarter reflects a marked slowdown in the growth of hourly compensation,” it said, as compensation growth declined by 0.1% in the quarter, down from 1.6% growth in the fourth quarter of 2024.