09:20 AM EST, 03/05/2025 (MT Newswires) -- Canadian productivity rose 0.6% quarter over quarter in Q4, its first increase in a year, as gross domestic product growth accelerated thanks to past rate cuts, while hours worked were constrained by labor stoppages, said Bank of Montreal (BMO).

Still, the big picture remains one of weakness, especially in contrast to the United States, noted the bank. Given rising trade tensions, the obstacles to attracting business investment from outside Canada could worsen this productivity gap.

Given the U.S. trade tariff impact on the Canadian outlook, productivity growth can support broader economic growth and -- crucially for the current economic backdrop -- allows incomes to rise without pressuring inflation, stated BMO.

Wednesday's unit labor costs edged up 0.2% in Q4, their slowest rise in a year, pointed out the bank.

Looking ahead, much lower population targets could drive businesses to squeeze more productivity out of existing workers, added BMO. That could raise productivity growth in the quarters ahead, assuming output remains firm despite trade uncertainty.

Canada's productivity growth remains soft despite the Q4 increase. This persistent issue should be among the top priorities to address to support medium- and long-term economic growth, according to the bank.