Canada Productivity Preview
Canada Productivity Preview: Productivity, due Friday, is expected to surge 1.1% in Q3 (q/q, sa) after the 0.3% decline in Q2. The huge gain in productivity is due to the rebound in Q3 GDP and sharp decline in hours worked during Q3. Hours worked are expected to decline 0.2% in Q3 (s.a., q/q) following the 0.5% drop in Q2, or fall at a 1.0% pace on a s.a.a.r. basis in Q3. The 1.1% jump in Q3 productivity equates to a 4.4% surge on a s.a.a.r. q/q basis, the result of the expected 3.5% in Q3 GDP (q/q, saar) and the 1.0% rate of contraction (q/q, saar) in Q3 hours worked. Unit labour cost are projected to rise 0.5% in Q3 (s.a., q/q) after the 0.7% gain in Q2. A weak long term productivity growth trend has been an ongoing concern at the BoC. The Q3 of 2016 report, while welcome, is driven by one time factors. Hence the concern over productivity will remain.