Real GDP: Profile of the eight major
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Real GDP of the Québec City CMA: Annual average growth per 5-year period
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The Québec City CMA showed remarkable economic strength in 2017. Data from the Conference Board of Canada shows a 2.3% increase in the real GDP from 2016, reaching $34.6B. The increase in production revenue in all sectors boosted the annual growth of the regional economy by more than 2% for the first time since 2011. As a result, Québec City is continuing to expand and maintaining its competitive position relative to other Canadian metropolitan areas.
Accounting for more than 80% of the regional GDP, the services sector set the pace in 2017 with a 1.9% increase. This success is due in particular to production services, which continued their upswing, growing by 0.8%. The return of major construction sites has stirred up activity in the finance, insurance, real estate and business services sectors. Additionally, research sites, big data management and digital apps will open up new doors in the professional, scientific and technical services sectors. As for consumer services, they are continuing to grow steadily, with a 7.2% annual increase last year. Household debt remains a concern, but the region can count on the benefits related to demographic growth, migratory gains and the expansion of the recreation and tourism sector. Public services grew slightly, by 0.3%, in 2017. All levels of government are taking action to meet healthcare and social services needs, as well as education needs. They also plan to increase their role in the development of urban, transportation and energy infrastructures. As a result, productivity1 in the entire services sector will continue to grow. In 2017, the region’s productivity ratio (measured here as the real GDP divided by the number of jobs) was $78,048, compared to $77,048 in the rest of the province. This represents a 1.3% increase from 2016 (+1.1% in Quebec).
The manufacturing industry continued to expand, with its GDP increasing by 6.9% in 2017. The Canadian dollar also remained below parity with the American dollar, fuelling exports. Additionally, investments aiming to increase production capacity and decrease operating costs are starting to bear fruit. These results are made even more beneficial by the fact that they reinforce the area’s position in terms of the manufacture of value-added goods—goods that, in many cases, meet specific needs. This will certainly help mitigate concerns regarding commercial trade, particularly those surrounding the renegotiation of the North American Free Trade Agreement (NAFTA) and the protectionist climate in the US. Furthermore, regional players can now benefit from new opportunities with the ratification of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) with the European Union and the upcoming implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These factors, combined with Quebec and Canada’s good economic climates, mean that manufacturers in the area have some interesting prospects. That said, businesses’ success will depend on continued investments in the purchase of specialized equipment, the implementation of automated processes and the use of automation in general. This concern is providing a strong foundation for increased productivity. As a result, in 2017, the manufacturing sector yielded $87,203 per job ($95,001 in Quebec), which is a 3.3% increase from 2016 (+5.6% in Quebec).
The construction industry is gradually regaining its strength in the Québec City CMA. In 2017, its GDP grew by 4.5%, following its 1.9% recovery in 2016. In particular, residential construction starts exceeded expectations, providing their second-best performance in 10 years. Larger construction sites are also returning.
This success is expected to continue in 2018 and beyond. At the time of writing, Québec International has recorded nearly 400 residential and non-residential projects, both upcoming and in progress. Investments in these projects total $17.5B. Of course, residential construction starts will return to normal in the short term to avoid flooding the market. In the non-residential sector, major commercial, industrial, institutional and infrastructure projects are expected to emerge regularly. In addition to the ongoing road improvement project, the Enfant-Jésus hospital expansion project is picking up the pace. Key multipurpose projects like Le Phare are preparing to leave the drawing board and become a reality. Furthermore, the area will soon be significantly updating its public transportation networks. All of these projects will not only fuel the construction industry, but also increase productivity in the sector. In 2017, its GDP per job decreased slightly by 0.2% (+1.2% in Quebec), reaching $96,538 ($85,080 in Quebec).
The strong performance of all of Québec City’s sectors slightly exceeded our expectations for 2017. This will translate to positive anticipated outcomes for 2018, with the GDP expected to grow by more than 2%. Productivity is also expected to increase due to the economic momentum. Last year, the area yielded $78,048 per job (+1.3%), compared to $77,980 in Quebec (+1.1%). This figure may soon approach the $80,000 mark thanks to an approximate 2% increase, which would allow Québec City to compete with its Canadian peers.
1 Labour productivity is measured by dividing the real GDP by the number of hours worked. This ratio indicates the value of goods and services produced for each hour worked. However, a measurement of hours worked is not available for census metropolitan areas. To get around this problem, we used the number of jobs in each area to calculate the value of the goods and services produced by each worker.