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Productivity climbs for a second quarter

Canada's labour productivity advanced in the first quarter as output rose at a faster pace than hours worked.

Labour productivity among the country's businesses rose 0.7 per cent in the first three months of the year, thanks to increases in the manufacturing and construction sectors, after increasing 1.2 per cent in the previous quarter, Statistics Canada said Tuesday.

Canada's sluggish productivity record has long been a source of concern for economists, who fret the country's living standards will suffer unless improvements are made. Labour productivity tracks real GDP per hour worked.

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In a shift from previous quarters, Canadian productivity gains outpaced the U.S., where productivity slowed to 0.6 per cent in the first quarter.

In Canada, output of businesses accelerated to 1.8 per cent in the quarter from 1.4 per cent in the fourth quarter as firms spent more on consumer goods and services, shelter, and inventory accumulation.

Hours worked in Canadian businesses rose 1.1 per cent in the quarter, the highest growth rate since the second quarter of 2004, as employment rose 0.7 per cent and hours worked per job increased 0.4 per cent.

The bulk of the productivity gains stemmed from goods-producing industries, which posted a 1.5-per-cent gain. Factories tallied their fourth straight quarter gain, and construction also increased.

Productivity in services-producing businesses slowed to 0.2 per cent in the first quarter after growing 0.9 per cent in the prior quarter.

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About the Author

Tavia Grant has worked at The Globe and Mail since early 2005, covering topics from employment and currency markets to trade, microfinance and Latin American economies. She previously worked for Bloomberg News in Toronto and Zurich, writing on mining, stocks, currencies and secret Swiss bank accounts. More

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