Canadian business productivity rose 1.0 per cent in the second quarter, marking its largest quarterly increase since the COVID-19 pandemic drove a 7.7 per cent gain in the second quarter of 2020, Statistics Canada reported Thursday.
The increase in the second quarter of 2026 came as business-sector value added increased while hours worked declined.
Goods-producing businesses lead productivity growth
The overall increase in labour productivity was driven by a rebound in goods-producing businesses, where productivity rose 1.7 per cent after two consecutive quarterly declines.
Productivity in services-producing businesses increased 0.7 per cent, marking the fourth consecutive quarterly gain.
Overall, productivity increased in 12 of the 16 main industry sectors in the second quarter.
Mining, oil and gas extraction, wholesale trade and manufacturing made the largest contributions to the increase in labour productivity. Utilities and retail trade recorded the largest declines during the quarter.
Hours worked edge lower
Total hours worked in the business sector declined 0.1 per cent in the second quarter after increasing 0.4 per cent in the previous quarter.
The decrease resulted from a 0.3 per cent decline in average hours worked, which more than offset a 0.2 per cent increase in the number of jobs.
Hours worked in goods-producing businesses fell 0.5 per cent in the second quarter after increasing in each of the previous two quarters.
In services-producing businesses, hours worked were largely unchanged during the quarter.
Unit labour costs continue to rise
Business-sector compensation increased 1.5 per cent in the second quarter, outpacing growth in real gross domestic product.
That resulted in a 0.6 per cent increase in unit labour costs, marking the fifth consecutive quarterly increase.
Unit labour costs measure the labour costs required to produce one unit of output.