Labour productivity in Canada’s business sector has declined for the first time in two years Statistics Canada reported Friday. From October to December, productivity fell 0.6% compared with the third quarter, halting a series of eight consecutive quarterly increases.

But the news isn’t entirely bad. For 2002 as a whole, Canadian businesses increased their productivity by 2.2%, on the strength of productivity gains in the first three quarters. This was more than twice the rate of annual growth of 0.8% during 2001, said StatsCan, when economic activity was weak.

South of the 49th parallel, some rather benign economic numbers were released today from the U.S. Departments of Labour and Commerce, respectively.

Labor said the producer-price index surged 1% last month “as war jitters generated the biggest surge in energy prices since the Gulf War.” But the increase doesn’t suggest a general inflationary hazard, according to the Labor Dept. “The core index, which excludes food and energy items, dropped 0.5%. Economists had expected only a 0.6% increase in the overall index and no change in the core index.”

The Commerce Department reported that the U.S. current-account deficit, the broadest measure of international trade, widened to a record gap in the fourth quarter. The trade gap, which measures goods and services as well as financial transactions, expanded to US$136.9 billion from US$126.3 billion in the third quarter.

Analysts predict that neither of these numbers will have much affect on the markets due to the stranglehold held by geopolitics, while investors continue to ignore fundamentals. Overseas markets are anticipating that a war with Iraq could be averted.

European indexes have moved sharply higher. At midday in Europe, the Paris CAC 40 is up more than 4.45%. In London, the FTSE 100 is up 3.05%, and Germany’s Dax 30 has added 3.22%.

Asian stock markets closed higher Friday, with Tokyo’s benchmark Nikkei average up 1.70% to 8,002.69.