Productivity in Q3 Rebounded Amidst Tariffs and Uncertainty December 3, 2025

Labour productivity rebounded following a significant decline in Q2, largely trigged by the trade war. Still, this rebound follows a long period of poor productivity (graph 1). While the slowdown in growth is a positive sign, high s continue to eat away Canada's competitiveness relative to the US.

Monthly data for hours worked show early signs of deceleration in Q4. However, assuming real growth is in line with Statistics Canada's flash estimate, this could imply declining productivity in Q4 2025. Wage growth also continues to rise, albeit more slowly, suggesting that unit labour costs remain high for businesses (graph 1).