Canada's record of declining productivity over the past three years is likely to make it more difficult for the Bank of Canada to tame inflation, raising the prospect of additional interest rate hikes even as the economy slows.
It also stands to add to unit labor costs, a key measure of inflation pressures coming from higher wages.
But data on Tuesday showed it rising more than expected to 4% in August, led by higher gasoline prices, while wage growth accelerated last month to an annual rate of 5.2%.
Output per hour worked has been in freefall," Derek Holt, head of capital markets economics at Scotiabank, said in a note.
Rising unit labor costs mean a choice for the economy - either businesses reduce their headcount to protect profits or monetary policy tightens further, Holt said.
Record levels of immigration have boosted Canada’s economic growth in recent years but per capita GDP has grown much more slowly compared to the United States.
So we bring more people in, or we run our plants harder," said Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, which represents 2,500 companies.
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It also stands to add to unit labor costs, a key measure of inflation pressures coming from higher wages.
But data on Tuesday showed it rising more than expected to 4% in August, led by higher gasoline prices, while wage growth accelerated last month to an annual rate of 5.2%.
Output per hour worked has been in freefall," Derek Holt, head of capital markets economics at Scotiabank, said in a note.
Rising unit labor costs mean a choice for the economy - either businesses reduce their headcount to protect profits or monetary policy tightens further, Holt said.
Record levels of immigration have boosted Canada’s economic growth in recent years but per capita GDP has grown much more slowly compared to the United States.
So we bring more people in, or we run our plants harder," said Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, which represents 2,500 companies.
The original article contains 544 words, the summary contains 150 words. Saved 72%. I’m a bot and I’m open source!