Productivity falls unexpectedly

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CBC News Posted: Sep 9, 2011 9:26 AM ET
Last Updated: Sep 9, 2011 9:24 AM ET

The productivity of Canadian businesses fell by almost one per cent in the second quarter, a turnaround from the 0.4 per cent improvement in the first three months of the year.

Labour producitivty fell by 0.9 per cent, Statistics Canada said Friday.

The decline came against a backdrop of several temporary events — such as Alberta's wildfires and the Japanese tsunami — that affected output more than labour, the data agency said.

For the first time in two years, businesses cut back production while continuing to increase hours worked during the April to June period.

The real GDP of businesses fell 0.3 per cent during the period. That's the first decline since the second quarter of 2009.

Goods-producing businesses contributed 2.1 per cent to the overall decline in business productivity, after rising 0.9 per cent in the first quarter.

The largest declines came in mining, oil-and-gas extraction (down 3.0) and manufacturing (down 1.8).

Wildfires in Northern Alberta, as well as maintenance shutdowns in petroleum production and the tsunami in Japan that disrupted the supply of motor vehicle parts to North America, all contributed to reducing output in the second quarter.

For comparison purposes, productivity at U.S. businesses was down 0.1 per cent in the second quarter, after falling 0.3 per cent in the first quarter. This was the first time since 2008 that there have been two consecutive quarters of decline in U.S.

Over the past 10 years, Canadian productivity growth has averaged just 0.9 per year, sagging below the long-run trend of between 1 and 1.25 per cent. U.S. trends over those longer periods have been above 2 per cent, although the trend has slipped to just 0.6 per cent, year over year, in the past year.