Faster growth expected for Montreal and Québec City economies in 2017

OTTAWA, Oct. 17, 2017 /CNW/ - Following modest economic growth last year, Montreal and Québec City have seen their economies heat up this year, according to The Conference Board of Canada's Metropolitan Outlook: Autumn 2017. Montreal's economy is forecast to grow by 3.2 per cent in 2017, while Québec City's economy is following closely with a 2.9 per cent spike in real GDP.

"Fuelled by a pickup in manufacturing and construction, and continued strength in the services sector, Montreal's economy is on track to post its fastest expansion since the turn of the century," said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. "Similarly, Québec City will see its fastest economic gain in 13 years. Real GDP growth is forecast to moderate to 2.0 per cent in both cities next year."

Highlights

• Montreal's economy is on track to increase by 3.2 per cent in 2017 and 2.0 per cent next year.
• Québec City is forecast to grow its economy by 2.9 per cent this year and 2.0 per cent in 2018.
• Calgary and Edmonton are forecast to be the fastest growing census metropolitan areas (CMAs) in Canada this year, with real GDP forecast to grow by 4.6 per cent and 3.9 per cent respectively.

Montreal
Montreal's economy is forecast to expand by 3.2 per cent this year before slowing to 2.0 per cent in 2018. This year's growth is being fuelled by a turnaround in the goods-producing sector, which is expected to post growth for the first time since 2012. In particular, manufacturing output is on track to expand by 4.0 per cent, its fastest gain since 2000, thanks to strength in areas such as pharmaceutical manufacturing and automation equipment manufacturing. On the other hand, aerospace products and parts manufacturing could be hard hit by recent duties imposed on Bombardier's jets by the U.S. Department of Commerce.

The local construction sector is also putting up impressive numbers this year. Building on last year's momentum, housing starts in the metropolitan area are on track to hit a five-year high and non-residential construction activity continues to fire on all cylinders. Accordingly, construction output growth is forecast to reach 3.1 per cent this year, before moderating to 2.1 per cent in 2018.

Adding to the renewed strength in the goods sector, the services side of the economy is projected to post faster growth in 2017. The transportation and warehousing industry is poised to lead the pack with a 6.7 per cent increase this year, its third consecutive expansion of above 6 per cent. A 2.0 per cent expansion is our call for total services sector output in 2018.

The solid economic performance will yield positive results on the job front, with employment expected to increase by an annual average rate of 1.6 per cent over 2017-18. As a result, the unemployment rate is forecast to decrease to a record low of 6.5 per cent by 2018.

Québec City
Following moderate growth last year, Québec City's economy is forecast to expand by a very healthy 2.9 per cent this year before cooling to 2.0 per cent next year. Although gains are expected across the board, economic growth will be particularly strong in the goods-producing industries. The local manufacturing sector is on track to post a 5.1 per cent increase this year thanks to the weaker Canadian dollar and investments to upgrade capacity and diversify product offerings. The 2018 outlook is also bright, although output growth is projected to come in at a more moderate 2.5 per cent.

Meanwhile, a steady new housing market and a pick up in non-residential activity will support output growth of 2.6 per cent in Québec City's construction industry. Lower housing starts next year should translate into a weaker 1.3 per cent gain in construction output.

The services side of the economy is benefitting from the turnaround in the goods sector, a bright employment outlook, a small pickup in the housing market, and a healthy tourism sector. Indeed, the following industries are expected to post output growth of 3 per cent or more this year: transportation and warehousing, wholesale and retail trade, finance, insurance and real estate, and personal services. All in all, output in the services-producing industries is projected to climb by 2.7 per cent in 2017 and by 2.0 per cent in 2018.

Employment in Québec City is expected to advance by 1.6 per cent this year and by 1.9 per cent next year, pushing down the unemployment rate from 4.6 per cent in 2016 to 4.4 per cent in 2018.

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SOURCE Conference Board of Canada