Purchasing power: Profile of the eight major Canadian CMAs
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Growth of purchasing power indicators in the Québec City CMA
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According to predictions from the Conference Board of Canada, the average salary in the Québec City CMA was $42,916 in 2017 ($43,185 in Quebec). This represents an increase of 1.7% from 2016 (+2.3% in Quebec). Labour shortages are still a pressing concern. This appears to have caused the average salary to increase across the board in the area. Job creation (particularly for qualified and full-time positions), the high employment rate and the increased inflation rate mean that salaries will continue to grow in 2018. Additionally, competition between Quebec’s cities to attract and retain talent should cause Québec City area employers to offer even more competitive salaries. For these reasons, average annual salary growth is projected to be around 2% until 2021.
The consumer price index (CPI) increased by 1.1% in Québec City in 2017 (+1.1% in Quebec). The low inflation rate in Québec City, which sat near 1% for the fifth year in a row, can be explained by the moderate improvement of the housing market (+0.9%)—the first component of the average basket of goods—and by the drop in fuel and hydro prices (-0.3%). Furthermore, the higher Canadian dollar eased the pressure on the price of imported goods. In 2018, the inflation rate is expected to increase slightly, nearing 1.5%. This projection is based on the anticipated increase of the GDP and the price of raw materials, as well as a slight increase in energy costs. Note that the value of the loonie this year will affect the projection, particularly because the Canadian dollar is sensitive to the price of raw materials and the fluctuations in the American economy.
Personal disposable income
Québec City’s CMA remains a leader in the province, with a per-capita personal disposable income (PDI) of $30,699 ($28,542 in Quebec). The 1.7% increase from 2016 (+2.7% in Quebec) exceeded the inflation rate, strengthening the purchasing power of Québec City residents. Because the average salary in Québec City remained steady in 2017, the increased PDI per capita can be attributed to the increased value of “other revenue.” Said increased value can be explained by the tax benefits obtained by many households, as well as exceptional returns on stock prices. Projections for 2018 estimate Québec City’s per-capita PDI to increase by more than 2%. The same can be said for Quebec. Employment performance and sustained economic growth will continue to boost per-capita PDI, which has been growing steadily for more than 20 years.
In 2017, retail sales in the CMA amounted to $14.9B, a 4.7% increase from 2016 (+5.7% in Quebec). This data testifies to the strength of consumption. The trend is expected to continue in 2018, with a projected 3.1% increase in retail sales. Again, the area’s economic strength and borrowing rates are beneficial, but consumers are continuing to shop online at giant international retailers, which may affect the growth of Quebec sales. Malls are continuing to modernize and work on their market positioning to draw new players. They are also keeping sustainability in mind by integrating technology into their business model. What’s more, new retailers are coming to the area in the near future. For example, Swedish company IKEA will be opening a new store, and Québec City will be welcoming French sports giant Décathlon and Montréal’s Adonis supermarkets.
According to the Office of the Superintendent of Bankruptcy, the Québec City CMA registered 2,121 bankruptcies in 2017, 202 more than in 2016 (+10.5%). Note that the area has stayed near the 2,000 mark for the third year in a row. While the primary economic indicators remained positive in 2017 (low inflation rate, affordable interest rates, creation of jobs, increase in revenue, etc.), the financial health of some consumers appears to remain shaky due to debt overload. However, this is mitigated by the fact that the percentage of the population declaring bankruptcy has remained stable, at 0.03%. In terms of businesses, Québec City counted 197 corporate bankruptcy filings in 2017, 47 more than in 2016 (+32.2%). Despite this, we strongly believe that businesses will be able to correct the course thanks to Québec City’s economic vitality.