Could labour productivity actually be this weak?
At the dawn of the new millennium Canadian labour productivity tumbled out of bed and has yet to find its footing. In fact, with the exception of 2005, the annual growth rate of productivity has not managed to exceed 1.5% this decade. And 2005 was likely an outlier, as the year-over-year growth rate decelerated sharply over the first three quarters of 2006. Using an estimate of 1.0% real GDP growth and the 3.3% increase in hours worked from the Labour Force Survey (LFS), labour productivity could end up falling by a year-over-year rate of 2.5% in the fourth quarter of 2006 leaving the annual average increase at just 0.3%. This is just a rough estimate because Statistics Canada uses a slightly different methodology when estimating productivity, but the implication is still that productivity in Q4 was likely abysmal. There are some logical explanations of why productivity should be weak in the current economic environment. For one, there is good reason to believe that the economic slowdo
