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* Labor productivity declines 0.5 pct in Q3
* Second consecutive decline after three quarters of gains
* Contrasts with U.S. rise in productivity in Q3
OTTAWA, Dec 7 (Reuters) - The labor productivity of Canadian businesses fell more sharply than expected in the third quarter, declining 0.5 percent in contrast to U.S. productivity which increased 0.6 percent in the same period, Statistics Canada said on Friday.
Analysts in a Reuters poll had forecast a 0.2 percent decline in productivity in the third quarter.
The setback followed an even sharper 0.6 percent decline in the second quarter, which came after three consecutive quarters of gains.
Statscan attributed the poor performance in productivity to an increase in the hours worked even though business output was unchanged from the previous quarter.
The real gross domestic product of Canadian business was flat while the hours worked climbed by 0.4 percent, easing slightly from a 1.1 percent increase in the second quarter.