Unit labour cost growth, inflation and productivity growth in Canada and the United States

The unit labour cost (ULC) is often used as a broad measure of international price competitiveness. It deviates from the inflation rate when the real wage rate and labour productivity grow at different paces. Since the COVID-19 pandemic, Canada has experienced an acceleration of unit labour cost growth and a significant upward deviation from the inflation rate, while this has not happened in the United States. This article explores the sources of the Canada–U.S. ULC growth gap and the factors contributing to its widening.