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Canadian labor productivity rises after 2 quarterly declines

Labor productivity of Canadian businesses edged up 0.2% in the fourth quarter of 2017, after a 0.5% decline in the third quarter, as business output grew at a faster pace than hours worked.

The increase in productivity was mainly driven by strength in the service sector, which posted an increase of 0.5% in the quarter, following a 0.6% decline in the prior quarter. Productivity in the goods-producing sector edged down 0.1% after five consecutive quarterly increases.

Real GDP of businesses rose 0.4% in the quarter, following a 0.2% rise in the previous quarter, amid widespread production growth in goods-producing and service industries during the quarter. Hours worked increased 0.2%, after a 0.8% increase in the previous quarter, as growth slowed in most major industry sectors.

Labor costs per unit of output rose by 1.5% for the second straight quarter, reflecting a 1.7% increase in average compensation per hour worked that was the highest rate of growth since the second quarter of 2014.

Labor productivity rose 2.1% in 2017 after a 0.6% increase in 2016 and unit labor costs were up 0.3% following a 0.1% decline in the previous year.