Release Explanation: The change in labor efficiency when producing goods and services. A higher number indicates a lower cost of production (and lower inflation) because workers are producing more per hour worked. A drop in a worker's productivity is equivalent to a rise in their wage. When businesses pay more for labor the higher costs are usually passed on to the consumer.

Trade Desk Thoughts: According to Statistics Cananda, the labour productivity of Canadian businesses fell 0.5% in the fourth quarter, extending the period of weakness in the business sector that began in the second quarter of 2007.

The real gross domestic product (GDP) of Canadian businesses shrank by 1.3% in the fourth quarter, reflecting weak domestic demand and the continuing slump in exports. This was the largest decline since the first quarter of 1991 when business sector GDP declined 2.2%.

At the same time, hours worked fell 0.8% in the fourth quarter of 2008 after remaining virtually unchanged in the previous two quarters. The majority of industries experienced a drop in productivity in the fourth quarter. Wholesale trade, manufacturing and finance, insurance and real estate accounted for much of the decline.

In the United States, productivity in the business sector edged down 0.1% in the fourth quarter. It was the first quarterly decrease since the fourth quarter of 2007. Labour costs per unit of production in Canadian dollars rose by 1.6% for Canadian businesses in the fourth quarter. This was just over twice the rate registered in the previous quarter (+0.7%).

Forex Technical Reaction: Crude was higher by about 25 cents in recent trade but the cad (USD/CAD) was reaching its highest level of the session.