Canada's labour productivity experienced a marginal decrease of 0.1% in the fourth quarter of 2025, according to Statistics Canada. This followed a period of growth in the third quarter. The slight decline reflects a mixed performance across different sectors of the Canadian economy.
The goods-producing sector saw a productivity decline of 0.9%, while the services-producing sector experienced a 0.4% increase. Hours worked in goods-producing businesses edged up by 0.2%, with manufacturing being an exception, seeing a 0.4% decrease. Conversely, hours worked in services-producing businesses saw a slight decrease of 0.2%.
Despite the fourth-quarter dip, overall labour productivity for 2025 increased by 1.1%, driven by strong growth in the third quarter. This annual increase was supported by a deceleration in the growth of hours worked, which slowed from 1.1% in 2024 to 0.8% in 2025. Hourly compensation rose by 0.5% in the fourth quarter, leading to a 0.7% increase in unit labour costs, marking the fastest quarterly growth since the first quarter of 2024.
Economists at Scotiabank noted that the consensus forecast anticipated this slight decline of 0.1%. While fluctuations in labour productivity occurred throughout the year amidst trade uncertainties and a weakening labour market, the overall annual growth indicates resilience in the Canadian economy. These figures are crucial for understanding Canada's economic performance and competitiveness on the global stage.
