Statistics Canada notes the decline comes against a backdrop of temporary factors which affected output more than labour, including wildfires in Northern Alberta and a tsunami in Japan.
The agency says businesses cut production for the first time in two years while continuing to increase hours worked, which explains the productivity downturn in the second quarter.
The real gross domestic product (GDP) of businesses was down 0.3 per cent in the second quarter, the first decrease since the second quarter of 2009.
StatsCan blames the decline largely on the goods-producing industries, which retreated after six consecutive quarterly advances while output in services-producing industries remained flat.
In contrast, hours worked in the business sector maintained an upward trend, rising 0.6 per cent in the second quarter.
Employment growth slowed to 0.4 per cent , while hours worked per job edged up by 0.2.
Goods-producing businesses (down 2.1 per cent) contributed the most to the overall decline in business productivity. The downturn was widespread, with the largest declines occurring in mining, oil-and-gas extraction (down 3.0) and manufacturing (down 1.8).
StatsCan says wildfires in Northern Alberta, as well as maintenance shutdowns in petroleum production and the tsunami in Japan that disrupted the supply of motor vehicle parts to North America, all contributed to reducing output in the second quarter.
Productivity in the services-producing industries edged down 0.2 per cent after two consecutive quarterly gains. Productivity declines in wholesale trade, retail trade, professional services, and accommodation and food services were partly offset by advances in other industries.
In the United States, the productivity of American businesses was down 0.1 per cent in the second quarter, after falling 0.3 in the first. This was the first time since 2008 that there have been two consecutive quarters of decline.