Quebec: Growth Strengthens in February

While the latest Labour Force Surveys (LFS) have pointed to a growing number of yellow, even orange External link., signals regarding the strength of Quebec’s economy, this morning’s release of real GDP paints a more favourable picture. That said, some caution is warranted in interpreting the data. First, these figures reflect production and can be influenced in the short term by technical factors such as inventory fluctuations. In addition, seasonally adjusted data on international exports, available through March, already point to a marked decline of about 10% at an annualized rate in the first quarter.

The quarterly economic accounts by expenditure category, due for release next month, will provide a clearer assessment of underlying domestic demand. They will offer additional insight into whether the slowdown suggested by the LFS is also evident in consumption, investment, and exports, or whether it reflects a temporary episode of statistical volatility.

This morning’s release is a welcome development, especially as recent cyclical indicators had been pointing to a softening over the past few months. It should nonetheless be interpreted with caution. Production data, while informative, can be influenced by temporary factors, particularly in the current environment of heightened trade tensions.

Moreover, the economic environment has become more challenging since the period covered by these data. Recent adjustments to tariffs on metal products External link. add to an already challenging context in which Quebec remains the province most exposed to sector-specific trade measures. In this context, and as highlighted in our latest Economic and Financial Outlook External link., Quebec continues to face among the weakest prospects in the country, which calls for maintaining a cautious stance in the near term.