Quebec: Temporary Disruptions Send Real GDP 0.4% Lower in April
- Real GDP by industry fell 0.4% in April, while the March gain was revised downward from 0.3% to 0.1%.
- The new March figure matches the national reading, while Quebec’s April print came in much lower than the 0.0% change nationally.
- For the first four months of 2023, cumulative growth compared to the same period last year was 0.9% in Quebec and 2.3% in Canada.
- 14 of 20 major sectors saw a drop in economic activity in Quebec.
- Output in the goods-producing industries fell 0.6% after a 0.2% decrease in March. Output was down 4.0% in agriculture and forestry, 2.2% in utilities and 0.5% in manufacturing. Mining, oil and gas posted a 3.3% gain.
- On the services side, output fell 0.3% in April, led lower by a 2.0% drop in wholesale trade and a 1.1% decline in public administration. Accommodation and food services was down 0.7% in April.
Real GDP fell 0.4% in April, slightly worse than the 0.3% we expected. Not surprisingly, extended power outages in parts of Quebec in April and the federal workers strike meant less output from utilities and public administration. Other industries were affected as well, with the power outages shuttering restaurants and businesses for a time. But it's unclear how much April’s drop in economic activity was due to these temporary disruptions.
Today's print revealed a number of cracks in Quebec's economy. The April output decline was broad-based in most major goods-producing and service industries. Output in the residential construction industry was down again as households and builders continue to feel the pinch of interest rate hikes. And the manufacturing sector is starting to falter. April manufacturing activity was led lower by durable goods (-0.7%), which are also beginning to feel the effects of rising interest rates. Goods exports were down as well amid a slowing global economy.
April's real GDP decline was exacerbated by temporary disruptions, but Quebec's economy is showing several signs of weakness that will persist over the coming months. The wildfires that began in June are also weighing on economic activity in the affected regions and wreaking havoc in industries like lumber and pulp and paper. In short, this summer’s wildfires, flooding and other natural disasters are exacting both a human and economic toll at a time when Quebec’s economy is already on shaky ground.
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