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Desjardins Leading Index

The DLI Slips Again in June as Quebec’s Economy Walks a Tightrope

September 8, 2022
Hélène Bégin
Principal Economist

Retail trade is another sector of the economy that was rather shaken up by COVID−19. The pandemic accelerated some existing trends, like e-commerce. The past two years have created winners and losers, but they’ve also changed the way things are done. While retailers were in “enticement” mode, they moved into “reaction” mode to deal with the challenges of public health regulations, customer concerns and consumers’ new purchasing habits. There is no question of going back. Sales caught up in 2021, but that’s over with, and 2022 isn’t looking so triumphant. We should expect sales growth to slow due to high inflation, rising interest rates, high gasoline prices and dwindling consumer confidence. Still, the strong labour market will temper that trend. Retail sales are expected to continue to increase in Quebec in the coming months, but more moderately than in the first six months of the year. However, two unknowns remain. Number one is where the pandemic is headed; it has foiled many predictions up to this point. Number two is the possibility of a recession—or not. Either one could drive sales down, although it’s unlikely we’ll see another decline like we saw in the spring of 2020 and early winter 2021.