Output per hour worked at Canadian businesses increased 0.9 per cent in the third quarter, offsetting a decrease of a similar magnitude in the second quarter, when the impact of the U.S. tariff shock reverberated across the economy. The index that Statistics Canada uses to track labour productivity is now roughly at the level it was at in the fourth quarter of 2024. (The Logic)

Talking point: There’s a cliché in forecasting that one month doesn’t make a trend. A quarter doesn’t either. Pre-tariff stockpiling and post-tariff uncertainty created a sort of yo-yo economics that made analysis near impossible. Factories led the third-quarter rebound, perhaps a recognition that most goods trade with the U.S. remained protected by the North American trade agreement. However, the tail of exceptionally weak productivity is too long to get excited by one good quarter. “To put it bluntly, we’re stuck in a vicious circle,” Bank of Canada deputy governor Nicolas Vincent said in a speech on productivity last month.

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