Canadian productivity outpaces U.S. in 2011

Productivity growth in Canada outpaced that of the United States last year for the first time since 2006, Statistics Canada reported Friday.

Business output grew while hours worked declined in the fourth quarter of 2011, creating productivity growth of 0.7%, following growth of 0.6% in the third quarter.

“The fourth-quarter increase in productivity occurred in a context where business output continued to grow, albeit at a slower pace than in the previous quarter, while hours worked declined for the first time in five quarters,” the agency said.

Gross domestic product of businesses grew 0.5% in the fourth quarter — down from 1.2% growth in the previous quarter while hours worked decreased by 0.2%.

“Both goods-producing and services-producing businesses contributed to the overall productivity gain in the fourth quarter,” Statistics Canada said. “The productivity of goods-producing businesses was up 1.1%, its second consecutive quarterly increase, largely a result of gains in manufacturing and construction. Productivity in the services-producing industries grew 0.5 per cent, following two consecutive quarterly declines.”

For the year as a whole, productivity grew by 0.8%, a slowdown from 1.5% growth posted in 2010, while business productivity growth in the U.S. fell to 0.2%, from four per cent in 2010.

“The 2011 difference in productivity between Canada and the United States was mostly the result of a difference in the growth in real GDPof businesses, since the two countries had similar increases in hours worked. Although it slowed in both countries in 2011, real GDP growth was higher in Canadian businesses (+2.6%) than in American businesses (+2.2%),” the agency said.

Unit labour costs in the U.S. grew 0.7% in the fourth quarter, while the relative strength of the Canadian dollar meant labour costs in U.S. dollars here fell 3.4%, their second quarterly decline.

“For 2011 as a whole, the growth of labour costs per unit of production in American businesses (+2.3%) outpaced that of Canadian businesses (+2.1 per cent) for the fist time this has occurred since 2006,” the agency said.

TABLE

Labour productivity and related variables for Canada and the U.S. (seasonally adjusted)

% change from previous quarter Q3 2011 Q4 2011

Canada

Labour productivity 0.6 0.7

Real gross domestic product 1.2 0.5

Hours worked 0.7 -0.2

Hourly compensation -0.1 1.5

Unit labour costs -0.6 0.8

Exchange rate -1.3 -4.2

Unit labour costs in U.S. dollars -1.9 -3.4

 United States

Labour productivity 0.4 0.2

Real gross domestic product 0.7 0.9

Hours worked 0.3 0.7

Hourly compensation 1.3 0.9

Unit labour costs 0.9 0.7

Source: Statistics Canada

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