Labour productivity grew by 0.5% in the first quarter, while unit labour costs rose only 0.3%, Statistics Canada said today.

The agency said the gain in productivity came as economic output rose at three times the pace of hours worked.

At the same time, unit labour costs, a key measure of inflationary pressures on wages, slowed for the first time in more than a year.

They rose 1.1% in the previous quarter.

Growth in GDP now has exceeded that of hours worked since the third quarter of 2004, resulting in productivity gains for seven straight quarters.

Since 2004, productivity has increased at an average quarterly rate of 0.7%.

While the Canadian gains are good, they lag behind those in the United States, where productivity grew by 1% in the first quarter.

For 2005 as a whole, labour productivity in Canada rose 2.3%, the best annual performance since 2000. That was slightly slower than the growth of 2.6% for the year in the United States.

In Canada, growth in real GDP hit 0.9% in the first quarter of this year after an increase of 0.6%.