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The Globe and Mail

Labour productivity dips in first quarter

Canadian labour productivity dipped in the first three months of the year, marking the first quarterly decline since 1996, Statistics Canada said Monday.

The annual productivity rate in the first quarter fell to negative 0.2 per cent, compared with a growth rate of 2.1 per cent in the first three months of the year before.

Labour productivity, Statscan said, has been gradually slowing since the second quarter of 2000. The rate is the ratio of output to hours worked.

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"The first quarter's decline in productivity growth occurred at a time of falling exports and investments in machinery and equipment and a slowdown in the growth of hours worked," the agency said.

"It was the first year-over-year drop in quarterly productivity growth since the second quarter of 1996."

Productivity, Statscan said, grows more slowly when economic growth is low and it often declines during a recession. Labour productivity rises during recovery and the subsequent period of expansion.

Both the Canadian and U.S. economies have been cooling since last fall.

"On a year-over-year basis, both Canada and the United States have seen slowdowns in productivity growth over the past three quarters," Statscan said.

"Labour productivity growth in Canadian businesses fell from 2.1 per cent in the second quarter of 2000 to [negative]0.2 per cent in the first quarter of 2001. U.S. growth slowed from 5.2 per cent to 2.7 per cent over the same period."

Meanwhile, Statscan said, unit labour costs in Canadian businesses rose at a slower pace than in the United States during the first quarter. On a year-over-year basis, costs rose 1.9 per cent in Canada and 3.5 per cent in the U.S.

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"This was the first time since the fourth quarter of 1999 that unit labour costs increased less for Canadian businesses than for their U.S. counterparts," the agency said.

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