Labour productivity posts strong gain in Q2: Statistics Canada

OTTAWA — The COVID-19 pandemic and the resulting lockdown helped boost labour productivity but led to a record decrease in employment.

Statistics Canada reports labour productivity of Canadian businesses rose 9.8% (compared to 4.5% in Q1), while hours worked fell at a much faster pace than business output, resulting in the considerable growth in productivity.

However, real gross domestic product (GDP) of businesses declined 14.5% (mostly occurring in April) following a 2.8% decrease in the first quarter. This is a 16.7% drop from the second quarter of 2019. The decline was widespread across all goods- and service-producing industries. Only the agriculture and forestry sector saw an increase.

Hours worked fell 22.1%, more than three times the 7% decrease in the first quarter. Hours worked were down 27.5% from the second quarter of 2019.

Employment also suffered a record drop (22.7%), while hours worked per job rose 0.7%. The number of people who had more than one job fell by almost half (44.3%), while the number of people who were absent without pay almost doubled (98.6%).

Hours lost vary by industrial sector. Manufacturing was down 30.6 million hours. The greatest decline was in other private services (41.9 million hours).

Labour costs per unit of output rose 4.1% after rising 0.7% in the first quarter. The last comparable increase occurred in fourth quarter of 1986 (3.6%).

This rapid increase is attributed to “an unprecedented increase” in the average compensation per hour worked (14.3%), which topped the historic productivity gain (9.8%).

Average hourly compensation rose 16.5% in service-producing businesses and increased 9.5% in goods-producing businesses. The gain in hourly compensation was widespread across all main industrial sectors, except professional services (3.5%).

Labour productivity in the US rose 1.6% in the second quarter, after posting zero growth in the previous quarter. The last time such a high growth rate was observed was the third quarter of 2009.

As in Canada, the real GDP (-11.5%) of US businesses and hours worked (-12.9%) both saw record declines.

Statistics Canada also reported the merchandise trade deficit was $2.45 billion in July. Both imports and exports posted strong gains, but remained below pre-pandemic levels. June’s deficit was $1.59 billion for June.

Statistics Canada says the motor vehicles and parts product category helped boost imports and exports.