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Economic News

Quebec: The Economy Held Strong in the Third Quarter

Steady Growth Driven by Services 

December 20, 2024
Sonny Scarfone
Principal Economist

Highlights

  • Quebec’s gross domestic product (GDP) rose 0.1% in September, allowing the province to post annualized gains of 1.8% for the third quarter as a whole. These results are above the Canadian average (1.0%).
  • Household consumer spending was strong this quarter, with an annualized increase of 4.4%. Residential investment also performed well (5.6%). On the other hand, business investments in non-residential structures (-6.9%) and in machinery and equipment (-7.8%) continued to disappoint. Imports (3.1%) also rose more than exports (2%).

Comments

Thanks to its summer gains, Quebec’s economy beat the Canadian average for a third quarter in a row. Once the education and health care strikes were resolved in late 2023, Quebec’s economy got back on track and has posted relatively robust growth from early 2024 onward. Consumer spending has also made fairly solid gains. This is in part because wages are catching up, and because Quebecers have a savings rate above the Canadian average.

 

In addition to consumer spending, residential investment (5.6%) was also a key driver of growth in the third quarter. Non-residential business investments, on the other hand, were rather disappointing. Investments in non-residential structures (-6.9%) and in machinery and equipment (-7.8%) both fell for the second quarter in a row.

 

In terms of sectors, goods-producing industries fell an annualized -3.3% over the quarter. The biggest contributor to this decline was manufacturing (-3.9%), which accounts for more than 12% of GDP. Low iron prices weighed on the mining sector (-9.0%) and construction also posted negative growth for the quarter (-2.3%).

 

Services continued to grow and were up 3.5%. Among the top performers were retail trade (7.3%), finance and insurance (5.7%), educational services (6.6%), health care and social assistance (4.8%) and public administration (4.0%).

Implications

The Quebec economy continues to evolve as we anticipated. Its annualized increase of 1.8% in the third quarter was slightly below our expectations. While growth did decelerate over the quarter and Quebec started the fourth quarter with slightly less carry-over than expected, we still believe the province will end the year with GDP growth of 1.5%.

 

In 2025, the Quebec government's efforts to balance its budget—combined with the planned slowdown in immigration—will put a damper on growth, particularly in several sectors that are currently thriving. In this context, we’d like to see a more robust performance from the goods-producing sectors.

 

But these sectors will also face significant uncertainty. The tariffs threatened by the incoming US administration are a risk to many of Quebec’s export industries. Our latest projections include scenarios External link. based on three different trade policies from the White House.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.