Canada's productivity tumbles in fourth quarter

Fri Mar 14, 2008 10:09am EDT
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By Louise Egan

OTTAWA (Reuters) - Canadian labor productivity worsened in the fourth quarter of last year, marking the biggest decline since 1995 as workers clocked in more hours on the job even as the economy slowed sharply.

Statistics Canada said on Friday that productivity -- a reflection of economic output per hours worked -- fell by 0.8 percent from the previous quarter, when it gained 0.1 percent.

The increase in productivity for all of 2007 was 0.5 percent, down from 1.1 percent in 2006, and the weakest gain since 2004.

"This is yet another disappointing chapter in the long-running saga of Canada's subpar productivity performance," said Doug Porter, deputy chief economist at TD Securities.

Employees spent 0.9 percent more hours working in the fourth quarter, while poor export sales dragged down economic growth to just 0.1 percent in the same period.

Canada's productivity, long a source of concern and befuddlement for policymakers, normally underperforms that of the United States.

U.S. productivity slowed to 0.2 percent in the fourth quarter from 1.6 percent in the third, Statscan said. However, its productivity gain for 2007 improved to 1.9 percent from 1 percent the previous year.

"The apparent inertia in Canadian productivity growth over the past years will continue to limit the growth in economic potential for Canada, further widening the chasm with the U.S. economy," said Millan Mulraine, economics strategist at TD Securities.   Continued...

<p>Workers are seen at an auto plant in Oshawa, Ontario in a 2005 file photo. REUTERS/J.P. Moczulski</p>