First quarter productivity up 0.4%, below forecast

Canadian workers were 0.4 percent more productive in the first quarter than in the fourth quarter last year, Statistics Canada said on Friday, but this was less than half the 0.9 percent expected by the market.

"Businesses boosted production in the first quarter while further increasing hours worked," Statistics Canada said, noting that it was the third straight quarterly increase.

It beat the U.S. productivity gain of 0.2 percent. Yet average compensation per hour in Canada rose faster, at 1 percent, than productivity, resulting in a 0.6 percent increase in labour costs per unit of production.

When calculated in U.S. dollars, to show competitive pressures, Canadian unit labor costs rose by 3.3 percent, largely because of the rise in the Canadian currency. By contrast, U.S. unit labor costs rose 0.4 percent.

Statistics Canada made substantial revisions to this series of data, some going back to 1981. The rise for the fourth quarter of 2010 was revised down to 0.3 percent from the 0.5 percent originally reported.