StatsCan shows which sectors saw biggest gains
Canadian business productivity rebounded in the third quarter of 2025 as output rose and hours worked edged down, according to a report from Statistics Canada (StatsCan).
Labour productivity in the business sector increased 0.9% in the third quarter, following a 1.0% decline in the second quarter and no change in the first, according to new data from Statistics Canada. The agency said this was the sixth quarterly increase in eight quarters.
The productivity gain coincided with a recovery in real gross domestic product (GDP) of businesses, which rose 0.9% after contracting 0.8% in the previous quarter. Statistics Canada noted that this turnaround occurred “despite a context of persistent uncertainty related to international trade during the third quarter.”
The upturn largely reflected higher output rather than more hours worked. Total hours worked in the business sector fell 0.1% in the third quarter, after increasing in each of the first two quarters of 2025.
StatsCan said the productivity increase “reflects the sharp recovery in business output, following a quarter of decline, while hours worked declined slightly.”
Canada has been dealing with productivity problems in the past years, according to experts.
Sectoral differences
Goods-producing industries led the overall productivity gains. Productivity in goods-producing businesses rose 1.6% in the third quarter, after a 1.3% decline in the second. Service-producing businesses posted a smaller 0.2% productivity increase, following a 0.3% decline in the previous quarter.
Manufacturing was the main driver of the improvement, with additional contributions from mining and oil and gas extraction, agriculture, forestry, fishing and hunting, and the real estate and rental and leasing sector. Construction, as well as accommodation and food services, also supported the upward move in productivity. Utilities was a notable outlier, recording a “significant decline for a second consecutive quarter,” Statistics Canada reported.
Overall, productivity increased in 9 of the 16 main industry sectors.
Hours worked across Canada
The picture for hours worked was more mixed. Hours worked in goods-producing businesses dropped 0.6% in the third quarter, more than offsetting a 0.2% rise in hours worked in service-producing industries. In total, 10 of 16 main sectors recorded increases in hours worked over the quarter.
The largest decline in hours worked occurred in agriculture, forestry, fishing and hunting, where hours fell 5.7%. The biggest increase was seen in the arts, entertainment and recreation sector, where hours worked rose 1.2%.
Statistics Canada said wildfires affecting some regions of Canada in July and August had a measurable impact on labour input, contributing to a 0.01 percentage point decline in hours worked in the business sector in the third quarter. The disruptions underscore the growing operational and staffing challenges that employers can face from climate-related events, including lost hours, redeployments and scheduling pressures.
On the cost side, the combination of higher productivity and rising pay resulted in a slower increase in unit labour costs. Hourly compensation grew 1.2% in the third quarter. With productivity up 0.9%, unit labour costs – defined by Statistics Canada as “the labour costs required to produce one unit of output” – increased 0.3%, down from 0.8% growth in the second quarter.
HR professionals can help boost Canada's productivity, according to a previous report.
How to boost companies’ productivity?
Here are four strategies for improving business productivity, according to BDO Canada:
- Increase R&D investments
- Enhance technology adoption
- Leverage partnerships through private equity (PE) and mergers and acquisitions (M&A)
- Foster a culture of innovation
A trio of new global surveys released November 12, 2025, reveals a striking paradox in the world of workplace artificial intelligence: while nearly all large organizations now use AI, only a minority of workers and companies are seeing its full benefits.
