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Economic News

Quebec's Economic Growth Continued to Slow in May with a 0.1% Uptick in Real GDP

August 27, 2024
Hélène Bégin
Principal Economist

Highlights

  • After jumping by an impressive 0.5% in April, real GDP edged up 0.1% in May, which is more typical for a growth phase.
  • Most of this increase was the result of a substantial 0.6% pickup in goods production. This was mainly driven by three sectors: oil and gas (+3.4%), utilities (+1.7%) and goods manufacturing (+0.8%).
  • Meanwhile the services sector flatlined in May. Declines in wholesale (-1.5%) and retail (-0.7%) trade offset gains in a few other sectors. (See table 1 for more details.)
  • More than half of the top 20 sectors saw production accelerate in May, so the 0.1% total increase is fairly well-distributed.
  • Real GDP by industry across Canada grew 0.2% in May, similar to the uptick in Quebec.
  • But the cumulative increase for the first 5 months of 2024 was bigger in Canada as a whole (+0.9%) than in the province (+0.5%). 

Comments

After quickly regaining all the ground lost last year, Quebec's economy entered a new growth phase. The 0.1% uptick in real GDP was modest, but we expected growth to slow after rebounding sharply in April. The province is at a different stage of the economic cycle than the country as a whole, which is experiencing a slowdown but didn't see real GDP contract for any length of time last year. Even though both economies have gone through similar cycles in the past, sometimes their paths diverge, as is happening right now.

Although Quebec's economy is still in a growth phase, the job market External link. is going through a soft patch and continues to slacken slightly. First, the lagged effects of the real GDP contraction in 2023 are still being felt. Second, many businesses find themselves in delicate financial situations External link. (in French only), which is limiting hiring and sometimes even leads to layoffs.

These conditions may persist for a few more months, until the Bank of Canada cuts key interest rates enough to ease the burden on businesses and highly indebted households. Sunnier economic prospects should also boost demand for goods and services and help the labour market recover over the next few quarters.

Implications

Even though real GDP didn't grow by much in May, Quebec's economy is still on an uptrend. This is great news, as the US economy is beginning to show signs of cooling while Canada as a whole is facing some economic challenges. But the province will have to navigate international economic and financial uncertainty while coping with Canada's railway disruptions, which will continue for several weeks longer even though employees have returned to work.

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.