The following is excerpted from a 15 March 2011 news release by Reuters Canada.

Labor productivity in Canadian businesses rose last year at the fastest pace since 2005 but still lagged behind the comparable U.S. rate as the stronger currency pushed up costs, Statistics Canada said on Tuesday.

In the fourth quarter of 2010, productivity, a measure of economic output per hour worked, rose 0.5 percent, beating the market forecast of a 0.2 percent gain.

Productivity increased 1.4 percent in the full year, up from 0.4 percent in 2009 but well below the U.S. productivity gain of 3.8 percent in the same period.

Canadian businesses expanded output by 0.9 percent in the fourth quarter while the number of hours worked grew 0.4 percent. The services industry saw productivity jump 0.8 percent while good-producing businesses recorded a 0.3 percent drop.

The sharp appreciation of the Canadian dollar against the U.S. dollar made Canadian businesses appear less competitive than their U.S. counterparts in terms of production costs. When measured in U.S. dollars, Canadian labor costs per unit leapt 3.2 percent in the fourth quarter versus a 0.1 percent decline for U.S. businesses. In 2010 as a whole, Canadian labor costs ballooned by 11.1 percent while costs fell 1.5 percent south of the border.

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