Economic newsletter – October 2010, volume 4, number 2

Tables and Analysis


Real GDP

Real GDP continued to grow in the Quebec City metropolitan region in the second quarter of 2010, hitting a new record of $25.7 billion. However, in line with the broader Canadian economy, economic growth was less robust in the second quarter than it was during the first three months of the year, with GDP posting a second-quarter increase of 0.6%, down from 1.9% during the first quarter.

Real GDP growth during the second quarter was adversely affected by a 0.9% drop in manufacturing output. This is hampering the manufacturing sector's recovery since the US market remains the main export market for companies in the Quebec City metropolitan region—an observation that also applies to most other Canadian regions.

The services sector grew by 0.7% in the second quarter. Production rose by more than 1.0% in the financial services and insurance sector, as well as in the information and cultural services sector. Business, commercial and transportation services, together with public utilities, turned in more modest performances, with growth rates ranging from 0.1% to 0.9%.

The construction sector maintained the pace seen in recent months, with quarterly growth of 2.1%. The residential sector's strong performance and the completion of various major institutional and road projects also helped boost the regional economy.



The pace of job creation picked up in the region during the summer. According to Statistics Canada's Labour Force Survey (LFS), the region had 417,900 workers in the third quarter, up 32,200 from the same period in 2009. The Quebec City metropolitan region turned in the third-best performance in Canada, behind Toronto (+125,000 jobs) and Montreal (+57,000 jobs).

Overall, hiring picked up in the third quarter, particularly among service companies, with a gain of 43,000 jobs compared with the same period of 2009. Professional, scientific and technical services, together with public services (education, healthcare, social services and public administration) and hotel and restaurant services were the most active sectors in terms of hiring.

The number of workers also increased on worksites in the Quebec City metropolitan region this past summer (+2,400 jobs), following a slack first half of the year. A number of major residential and non-residential projects were in full swing—a situation that could continue until the end of the fall. The region had 14,500 fewer manufacturing jobs in the third quarter compared with the same period last year. The end of government support programs, combined with the slowdown in exports (particularly US-bound exports), put the brakes on hiring across the entire manufacturing sector (this phenomenon was also observed at the provincial and levels).



The dynamic regional labour market was reflected in several improved indicators in the third quarter. Overall employment grew faster (+8.3%) than the active working population (+7.4%), leading to a pronounced drop in the unemployment rate, which dipped to 4.4% this summer (5.2% in 2009). The region thus has the lowest unemployment rate in Canada. Meanwhile, the employment rate hit a new monthly record of 66.8% in the third quarter, narrowing the gap between Quebec City and metropolitan regions in Western Canada, where the employment rate is more than 70%. The improvement in these indicators is conducive to maintaining consumer confidence and fostering economic growth.


Capital investments

Capital investments topped the $10.0 billion mark in the Quebec City metropolitan region in 2009 despite the gloomy global economic outlook. The region is hoping to maintain this momentum in 2010, backed by the sixth consecutive year of growth (+2.5%). According to data compiled by Quebec International, the year-to-date performance is highly encouraging. Several private projects totalling nearly $3.0 billion are underway in Quebec City and Lévis alone.

A number of major projects will continue to attract attention in the region in 2010. The residential housing stock will continue to grow thanks to rental, condo and seniors' housing projects. Meanwhile, the public sector will continue its efforts to restore the road network, upgrade cultural and sports infrastructure and construct new college buildings. Other projects will also be in the spotlight, including the addition of infrastructure at the Charlevoix Massif and the creation of wind farms in the Côte-de-Beaupré and Charlevoix regions.

The manufacturing sector has been on the wane since 2006, accounting for only 4.0% of regional capital expenditures in 2010, down from 10.0% in 2006. However, a number of signs indicate that manufacturers might be taking advantage of the modest global economic recovery and historically low interest rates to carry out investment projects, although the 2006 peak ($675.5 million) still remains out of reach.


Venture capital

The total value of venture capital investments in the Quebec City metropolitan region reached $18.6 million in the second quarter, or an outstanding annual growth rate of 284%. Life sciences accounted for the lion's share (64.4%), edging out the traditional sector (21.3%) and information technology (14.3%), which totalled $4 million and $2.6 million respectively. It should also be noted that the region accounted for 18.7% of the provincial total in the second quarter, up from 7% in 2009. In addition, nine Quebec City-based firms received venture capital investments during the quarter, up from five during the same period last year.

Thanks to this performance, the Quebec City metropolitan region posted an encouraging half-year, during which time 12 firms received venture capital investments totalling $22.4 million, compared with eight firms and $57.8 million during the first six months of 2009. Although the region was unable to repeat its record-breaking performance of last year, things got off to a good start in historical terms.


Demographic picture

The Quebec City metropolitan region recorded annual demographic growth of 1% in 2009. According to the reference scenario used by the Quebec Statistics Institute (ISQ), the regional population will continue to grow over the next two decades. Annual increases of nearly 1% are also expected over the next five years. However, growth will depend on a variety of factors, including a larger influx of foreign immigrants. According to Statistics Canada's 2006 census, the Quebec City metropolitan region was home to 26,505 immigrants, 8,440 of whom arrived between 2001 and 2006. Approximately 48% of them were between 25 and 44 years of age, thus helping to offset the aging population. It should also be noted that the region's retention rate for newcomers was 85%, compared with 80% across Canada. The low unemployment rate and the steps taken to promote regional economic, cultural and social diversification have made it possible to retain more immigrants. The implementation of regional initiatives, such as foreign recruitment missions and the one-stop employment website for strategic workers (, have also helped to address this issue.