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Quebec and Ontario Economic News

Quebec: Real GDP Surged in January After Falling in Late 2023

April 23, 2024
Hélène Bégin
Principal Economist

Highlights

  • Real GDP rebounded 1.9% in January after falling 0.2% in November and 1.5% in December. This is a more substantial recovery than the 0.6% uptick observed in January for Canada as a whole.
  • These gains can largely be attributed to the end of strikes in the education and healthcare subsectors. But even excluding these sectors, real GDP advanced 0.5% in January.
  • January’s numbers are encouraging, with 17 of the 20 main industrial sectors posting real GDP growth.
  • Goods production rose 1%, with positive contributions from almost all sectors. Despite this bounceback, goods production has been trending down for several months.
  • The service sector jumped 2.3% in January as public sector employees returned to work, but other sectors also moved up (See table 1 for more details).

Comments

If we look past the recent disruptions to real GDP, mainly caused by the strikes in education and healthcare, Quebec’s economy has been struggling since spring 2023. While it’s encouraging to see that most sectors posted some growth in January, it’s not enough to offset the wider downward trend in a number of industries. The resilience of the US economy is lending some support to the manufacturing sector, with goods exports to the United States continuing to rise. But industries centred on Quebec and Canada are still feeling the impacts of depressed domestic demand. In the service sector, industries reliant on household spending are facing challenges. High interest rates and inflation have eroded consumer purchasing power, which means households are spending less on discretionary goods and big-ticket items. This includes clothing and recreational goods, as well as furniture, appliances and electronics.

Implications

The real GDP rebound was widely anticipated. In addition to the one-time events influencing results from November 2023 onwards, we’ve found some other positive points in January’s detailed numbers. Quebec’s real GDP rebound of 1.5% in January was more pronounced than Canada’s 0.6% gain, since the strikes and their resolution had the greatest effect on this province. After three straight quarters of real GDP decline, from spring 2023 to the end of the year, Quebec’s economy will have a positive first quarter. We’re not out of the woods yet, though, and the real recovery should take place over the second half of 2024.

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.