After posting strong growth of 0.8% in the first quarter of 2003, business productivity declined in the second, showed almost no increase in the third, and fell a further 0.3% in the fourth quarter, Statistics Canada reported today.

As a result, annual labour productivity growth for 2003 was only 0.1%, the smallest annual increase since the 0.2% drop in 1996.

This compares unfavourably with U.S. productivity, prompting some economists to forecast a further rate cut from the Bank of Canada in the coming months.

StatsCan says U.S. quarterly productivity growth slowed in the fourth quarter to 0.5%, down from the 2.1% observed in the third quarter.

But despite this slowdown, says Statscan, American businesses recorded strong productivity growth of 4.5% for 2003 overall, similar to the 4.9% posted in 2002. “An increase of this magnitude has not been seen since 1950.”