Canada’s business productivity improved in the third quarter as hourly wages grew, according to the latest data, which also showed a drop in hours worked amid the trade war.
Statistics Canada reported Wednesday that labour productivity increased 0.9 per cent from July through September 2025 compared to the second quarter, when it declined one per cent.
The agency defines labour productivity as a measure of how much each hour worked contributes to Canada’s economic output, or Gross Domestic Product.
GDP grew by 0.6 per cent in the third quarter after falling 0.5 per cent in the second quarter, which means the economy managed to avoid a technical recession, as defined by two straight quarters where GDP drops.
Economist Nathan Janzen at Royal Bank of Canada had noted when the latest GDP numbers came out on Nov. 28 that the report showed “mixed” signals, with some sectors appearing to stabilize from prior tariff shocks, while domestic demand was still weak.
This means although recent economic indicators appear to be mostly positive, there are still some underlying areas that could continue to struggle through the trade war, including consumer spending and job security.
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Canada’s unemployment rate has been hovering around seven per cent, with Algoma Steel the latest major Canadian company to announce layoffs as a direct result of tariffs.
Statistics Canada on Wednesday also noted that hourly compensation increased 1.2 per cent in the third quarter, after falling 0.5 per cent in the second quarter. This indicated that those who were employed in Canada at the time may have seen their wages climb slightly.
Although there may have been some wage growth, Statistics Canada says the total number of hours worked saw a decline during the third quarter by 0.1 per cent, after rising in the first six months of 2025. This was especially the case for goods-producing businesses, the agency added.
Wildfires contributed to a loss of 1.6 million hours of work during the third quarter, especially in July and August. Although roughly half of those losses were offset by overtime work, there was still a net loss of 789,000 hours, according to the Statistics Canada report.
The full jobs report for the month of November will be released on Dec. 5.
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