TORONTO, Sept. 12, 2011 /CNW/ - Following an encouraging growth spurt in
the early months of 2011, Quebec's economy slowed to a pause in the
second quarter, according to the latest RBC Economics Provincial
Outlook report. RBC forecasts that the provincial economy will
underperform the national average and grow by 1.7 per cent this year.
The pace will pick up in 2012 with a growth rate of 2.1 per cent.
Sluggish demand in the U.S. and a strong Canadian dollar caught up with
Quebec's manufacturers in the second quarter. At the same time, changes
to mortgage lending rules and deteriorating housing affordability
contributed to a cool down in provincial housing sector activity.
"General weakness in Quebec's economic indicators in the second quarter
is likely to be even greater than we previously anticipated - it
wouldn't be surprising to see a contraction in the province's economy
during that period," said Craig Wright, senior vice-president and chief
economist, RBC. "Nonetheless, this economic stand-still will be
short-lived, as we expect stronger growth in the U.S. economy, improved
job prospects, and increased capital spending to stimulate activity in
Quebec's economy going forward."
The RBC report notes that moderately accelerating growth in the United
States and elsewhere in Canada will re-invigorate demand for Quebec's
export products. In addition, steady improvement in the province's job
market will support consumer demand.
"Going forward, increased investment in non-residential structures and
equipment in the private and public sectors is likely to be a key
contributor to Quebec's economic growth," added Wright. "This will
generate substantial construction activity outside the residential
sector. The majority of this investment will be directed at public
infrastructure, electricity generation, and mining and metal refining
Despite the economic lull this spring, Quebec's job market continued to
show improving trends in recent months. The provincial unemployment
rate fell in July to 7.2 per cent - its lowest level in three years -
before rebounding modestly to 7.6 per cent in August. RBC Economics
projects that job creation will be sustained through the remainder of
2011. Overall, a total of almost 60,000 new jobs are expected to be
created in the province this year.
The RBC Economics Provincial Outlook assesses the provinces according to economic growth, employment growth,
unemployment rates, retail sales, housing starts and consumer price
indices. The full report and provincial details are available online as
of 8 a.m. ET today at http://www.rbc.com/newsroom/reports.html.
For further information:
Craig Wright, RBC Economics Research, (416) 974-7457
Robert Hogue, RBC Economics Research, (416) 974-6192
Elyse Lalonde, RBC Media Relations, (416) 974-8810