Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsEconomyCanada's business productivity falls for the second straight quarterRising labour costs outpaced growth at the start of 2026 You can save this article by registering for free here. Or sign-in if you have an account.Productivity in the agriculture, forestry, fishing and hunting sector fell 3.5 per cent. Photo by Getty ImagesOne of the economy’s most persistent challenges reared its head again as rising labour costs outpaced growth at the start of 2026 and Canadian business productivity fell for the second straight quarter.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorStatistics Canada said Wednesday a “mild contraction” in the pace of output reduced labour productivity in the business sector by 0.5 per cent in the first quarter, following a 0.3 per cent decrease in the fourth quarter of 2025.The first-quarter decline was led by a contraction in goods-producing businesses, where productivity fell 1.7 per cent. The agriculture, forestry, fishing and hunting sector was the main contributor with a 3.5 per cent decline. Productivity also declined 1.3 per cent in the construction industry and 0.3 per cent in manufacturing.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againService-producing industries managed a modest 0.3 per cent increase. The strongest gains in productivity came from information and cultural industries (1.6 per cent), transportation and warehousing (1.2 per cent) and retail trade (one per cent).“Overall, productivity decreased in 10 of the 16 main industry sectors in the first quarter,” the agency said.Productivity, which measures the amount of economic output produced per hour worked, is widely viewed as a key measure of economic prosperity. Canada has struggled with weak productivity growth for decades and lags many peer countries, including the United States.In a note, Desjardins economist LJ Valencia said real GDP in the Canadian business sector has fallen three times in the last five quarters as the ongoing trade tensions with Canada’s neighbour and largest trading partner continues to weigh on the economy.“Looking ahead, our analysis suggests that the federal government’s immigration policies are expected to further slow population growth,” he said. “Still, uncertainty surrounding the trade war will shape the near-term trajectory of Canadian business investment and productivity, with the outcome of this year’s Canada–United States–Mexico Agreement (CUSMA) joint review being pivotal.”As productivity dipped, overall hours worked rose 0.4 per cent, reflecting a 0.1 per cent rise in the number of jobs. Average hours worked also increased 0.3 per cent.Meanwhile, labour costs continued to rise for the fourth quarter in a row. Hourly compensation went up 0.9 per cent, pushing unit labour costs (ULCs) up 1.4 per cent. According to Statistics Canada, ULCs measure the amount businesses pay in wages and benefits to produce one unit of real output.“The acceleration of ULC growth in the beginning of 2026 is a worrying sign, as elevated costs continue to undermine Canada’s competitive position and continues to exacerbate challenges for businesses across the country,” said Valencia. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.