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Economic News

Quebec: The Economy Is Stronger than Expected, with Real GDP Gaining 0.6% in April

July 30, 2024
Hélène Bégin
Principal Economist

Highlights

  • The healthcare and education sector strikes—and their economic impact—are now far behind us, when we look at the numbers.
  • After a 0.3% drop in March, real GDP by industry jumped 0.6% in April. We had predicted somewhat smaller growth over the month.
  • This rebound is surprisingly out of sync with Canada's economy as a whole, which advanced just 0.3% in April.
  • Quebec's stellar performance in April can be attributed to a 2.0% rally in goods production after a 1.1% slide in March (see table 1 for details).
  • Service production inched up 0.1% in April.
  • However, it's true that Canada had started the year on a better note, since Quebec was particularly hard hit by its public sector strikes.
  • The cumulative change to Quebec's real GDP is 0.3% for the first four months of 2024, compared to the same period in the previous year. Canada's real GDP rose a cumulative 0.8% in that same time (see table 2 for details). 

Comments

After a number of major challenges and three straight quarters of real GDP contraction in 2023, Quebec's economy is no longer just recovering: it has returned to growth. The province has pulled itself out of the economic doldrums that lasted from spring 2023 through the end of the year and is enjoying a rather strong upsurge. During last year's contraction, real GDP fell about 2%, a cumulative decline similar to what we saw during the 2008–2009 recession.

In contrast, the labour market was fairly resilient last year due to structural demographic factors. Employment typically lags behind overall economic performance and has dropped recently. We expect it to falter for a few more months still. We also expect the unemployment rate to keep rising. After hitting a low of 3.9% in November 2022, it has continued to grow, coming in at 5.7% for June 2024. It may even creep past 6% before the year ends. 

Implications

Quebec is out of its recovery phase and has returned to growth. June's numbers even beat our forecast. While these outstanding results could always be revised downwards (as is often the case), the upward trend seems solid and we're optimistic about the months ahead. However, despite the sunnier outlook for Quebec's economy, many businesses and households are facing difficult, and even dire, financial situations. The Bank of Canada should continue to cut its key rates this year and next, which should help borrowers and solidify the economic growth that has taken hold in Quebec.

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.