OTTAWA, March 13, 2018 /CNW/ - Many Quebec cities will see their economic growth slow to around 2 per cent, or below in 2018, according to The Conference Board of Canada's Metropolitan Outlook: Winter 2018.
"Economic conditions were strong in most Quebec cities last year, with many hitting their highest growth rates in years," said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. "But, the pace of expansion is set to moderate this year, as prior surges in consumer spending and strong employment gains taper off. The cooling in growth also comes at a time when there are a host of downside risks to the economy from abroad, particularly U.S. trade and tax policy."
- Cities in the province of Quebec will see economic growth of between 1.6 and 2.3 per cent in 2018.
- At 2.3 per cent, Québec City's real GDP growth is expected to rank in the top 10 of the 29 Canadian metropolitan areas covered in this edition of the Metropolitan Outlook.
- Vancouver is forecast to be the fastest growing census metropolitan area (CMA) in Canada this year, even though real GDP growth is forecast to moderate to 2.7 per cent.
Ranking among the top 10 cities, Québec City's economy is expected to advance by 2.3 per cent in 2018. A mix of factors lies behind this positive outlook. Québec City's services-producing industries are set to add about 8,000 jobs this year, with about half of that coming in the finance, insurance, and real estate industry. The area's good-producing industries are set to post output growth of 2.1 per cent, led by a healthy outlook in manufacturing. Meanwhile, consumer and business confidence is up across the province, something that will be mirrored in spending and investment patterns across industries in Québec City.
Other bright spots in the economy include industries such as professional, scientific, and technical services, retail trade, accommodation and food services, and arts, entertainment and recreation. Along with solid domestic demand, a positive tourism outlook will also support growth in many of these industries.
Job growth is expected to average a solid 1.9 per cent per year over 2018-19, following stagnant growth over the previous two years. Québec City has one of the lowest unemployment rates among the metro areas covered in this report (only Victoria's is lower), and this will not change over the near term, although the jobless rate is expected to edge up from 4.2 per cent last year to 4.4 per cent this year.
Montréal's economy is forecast to slow to 2.1 per cent this year, down from last year's impressive 3.5 per cent. The improvement in Montréal last year was fuelled in part by a turnaround in manufacturing activity and an acceleration in construction growth, but both industries are set to post smaller advances this year. Housing starts will remain healthy at about 19,000 units, following a very strong 2017, but this will be tempered by the winding down of major non-residential projects across the metropolitan area, including the $4.2-billion Champlain Bridge project. Despite the imminent threat of increased protectionism in the United States—the largest market for the area's export-oriented manufacturing industry—output in Montréal's manufacturing industry is forecast to advance by 1.9 per cent this year.
Last year's strong economic growth was also driven by the consumer—retail trade output climbed by a vigorous 5.6 per cent. A weaker job market and rising interest rates are expected to limit output growth in retail trade to a still decent 2.6 per cent in 2018.
Against this backdrop, employment is expected to increase by 0.8 per cent per year over 2018-19, down from an average annual advance of 2.5 per cent in the previous two years. Despite the cooler job growth, the unemployment rate will continue to fall as the labour force climbs at an even slower pace.
Following a strong increase of 2.9 per cent last year, Sherbrooke's economy is forecast to expand by a further 2.2 per cent this year. Growth this year will be broad-based, with most sectors contributing to the positive outlook. In fact, a small uptick in housing starts, strong employment gains, healthy tourism activity, and decent population growth will bolster multiple industries, including wholesale and retail trade, professional, scientific, and technical services, arts and entertainment services, and accommodation and food services. Although the manufacturing and construction sectors are both expected to post increases in output in 2018, the pace of growth will be much slower than last year. Meanwhile, the region's unemployment rate will remain flat this year before hitting an all-time low of 5.4 per cent in 2019.
Saguenay's economy has gone through significant ups and downs in recent years but seemed to turn a corner last year, as services remained strong and goods posted growth for the first time since 2012. The goods sector is expected to continue to recover this year, helping to offset slower gains on the services side of the economy. All in all, economic growth is poised to decelerate to 1.6 per cent in 2018, still well above the meagre rates recorded over 2013–16. Employment gains were quite strong last year, but a repeat is not in the cards this year. In fact, employment is forecast to fall by 1.5 per cent in 2018. This, along with rising interest rates, will lead to moderating output growth in wholesale and retail trade.
Following a strong economic performance last year, Trois-Rivières' economic growth is forecast to slow to 1.9 per cent this year. Contributing to this slower growth is a mix of local and macroeconomic factors, such as further delays in the Quest Rare Minerals' industrial complex project, increasing interest rates affecting housing and consumer-oriented industries, and the uncertainty around NAFTA negotiations. Meanwhile, employment growth will also slow over the near term, as an average of 735 net new jobs per year are expected to be created this year and next, down from the prior two-year average of 1,100 net new jobs. Faster labour force growth will push up the unemployment rate to 6.2 per cent in 2018, slightly above the provincial average.
Released today, Metropolitan Outlook: Winter 2018, is The Conference Board of Canada's annual analysis of 29 Canadian census metropolitan areas.
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SOURCE Conference Board of Canada
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