Economic update. Quebec City metropolitan region 2010 first quarter

Transcription

1 Economic update Quebec City metropolitan region 2010 first quarter

2 METHODOLOGY This publication, entitled ECONOMIC UPDATE Quebec City metropolitan region 2010 first quarter, was conducted by Pôle Québec Chaudière-Appalaches (POLE QCA). In addition to addressing key economic indicators for assessing regional performance, changes in a number of regional economic variables are also compared with those of seven other metropolitan areas in Canada: Montreal, Toronto, Ottawa, Winnipeg, Calgary, Edmonton and Vancouver. These benchmark regions were selected because, together with Quebec City, they form the eight largest metropolitan areas in Canada and because they have diversified economies comparable to that of the Quebec City Census Metropolitan Area (CMA). Four key indicators were selected for this analysis: economic growth, labour market, investment and tourism. The information in this publication was current as of July It is based on statistical data published by recognized organizations. NOTE TO READERS This study was produced by POLE QCA s Department of Economic Studies & Strategic Monitoring. This team of professionals is responsible for ensuring the availability of high-quality economic information.to that end, they monitor changes in the economic and business environment at the regional, national and international levels and conduct various types of research and analysis in order to identify opportunities, guide development strategies and define actions to be taken in support of regional economic growth.

3 SUMMARY The Quebec City census metropolitan area registered solid economic growth in the first quarter of GDP increased by 1.9% on an annualized basis, surpassing the figures recorded at the end of the recessions of 1991 (+1.7% in Q1-1992) and 1996 (+1.3% in Q1-1997). This recovery, which is based on the performance of all sectors, points to an enviable economic vitality. In this regard, construction starts involving new housing projects, office buildings and businesses supported the real estate sector. In addition, the gradual recovery of new orders benefited high-tech companies and also helped to minimize the downturn in the manufacturing sector. According to our forecast scenario, Quebec City s economy will continue to grow over the rest of the year. A number of major projects will stimulate residential and non-residential investments. The presence of structured sectors of excellence (finance and insurance, optics/photonics, biotechnology, health foods, etc.) will support the competitiveness of regional companies. In addition, the gradual turnaround of the US economy will lead to a moderately higher number of new orders of manufactured goods. Although not completely immune, the Quebec City region should also be able to adapt to certain constraints, such as the gradual discontinuation of expansionist government policies and the impact of the turbulence observed in Europe. Senior Economist POLE QCA 1

4 1 ECONOMIC GROWTH According to the Conference Board of Canada, real GDP in the Quebec City CMA rose by 1.9% in the first quarter of 2010, reaching $24.9 billion. The region has now made up for the output lost during the recession and regained the heights reached in The region recovered quickly in the first quarter Once again, the Quebec City CMA capitalized on the strong performance of the construction industry (+3.5%) and services sector (+2.3%), particularly financial services and insurance. The regional economy was also sparked by internal demand, with retail sales jumping by 7.3% compared with the same period in In addition, the manufacturing sector put the brakes on its decline despite the financial difficulties faced by a number of major companies. Although Quebec City finds itself in the middle of the pack as regards GDP growth in the first quarter, it has no reason to envy other Canadian regions. Its growth is driven by all sectors, whereas British Columbia and Ontario actually benefited from a short-term event and a one-time government stimulus: the Olympic Games were beneficial to the Vancouver region, while government assistance for the manufacturing industry stimulated regions across Ontario. The Quebec City CMA thus offers better economic stability and is more likely to maintain sustained growth in Overall, the Quebec City CMA remained among Canada s top-performing metropolitan economies in the first quarter. However, the robustness of the regional economy will be tested in the coming months. Although Quebec City is still counting on the positive effects of economic diversification and has a large number of major projects scheduled for completion over the next few years, it still faces certain constraints. For example, the provincial government s contribution will diminish as temporary tax policies that stimulated the economy in 2009 (renovation credits, support program for businesses at risk during the economic slowdown, etc.) are discontinued. In addition, a gradual increase in interest rates could moderate consumption levels. Also, the manufacturing sector continues to await clearer signs of recovery in the US economy. 2

5 Annual Real GDP Growth (%) Quebec Montreal Toronto Ottawa Winnipeg Calgary Edmonton Vancouver Hamilton Halifax Regina Saskatoon Victoria Q Q ,0 1,9 (1,0) 1,3 0,1 3,1 1,0 2,7 1,2 1,6 (2,6) 0,2 (2,2) 0,7 0,0 3,1 (1,4) 2,2 2,1 2,0 (0,8) 0,7 (1,5) 1,1 0,6 2,5 Productivity was up 1.9% year-over-year in the Quebec City region Sources : Conference Board of Canada and PÔLE Québec Chaudière-Appalaches 3

6 2 LABOUR MARKET According to the labour force survey (LFS) conducted by Statistics Canada, the Quebec City CMA had 384,900 workers in the first quarter of 2010, down 6,000 from the same period in The drop was observed among full-time workers (-1,700) as well as part-time workers (-4,300). These job losses brought down the employment rate by 1.7 points, from 63.6% in the first quarter of 2009 to 61.9% in the same period of In addition, the unemployment rate declined by 0.1 points year-over-year to 5.1%. Although this is one of the lowest levels in Canada, it is primarily attributable to the sharp drop in the labour force participation rate (-1.7%). The uptick in hiring continued into the second half of the year The job market grew at a slower rate in the Quebec City region in the first quarter of 2010 compared with the same period of Leading companies in the shipping, aerospace, biopharmaceutical, biotech and geospace sectors temporarily or permanently shut down their operations due to continued difficult economic conditions, leading to a number of lay-offs. However, the market s performance in the Quebec City CMA in the first three months of 2010 should be seen in light of the outstanding start to the year in The main hiring sectors construction and services could not maintain that rapid pace. Instead of collapsing, however, they returned to more sustainable employment levels. In addition, there are signs that the manufacturing sector will need new workers in both the durable and non-durable goods sectors. The LFS also indicates that workers aged 30 and older were those primarily affected by job losses in the first quarter of Despite these losses, unemployment continued to decline due to a sharp drop in the participation rate in the 30+ age group. The rate was 3.8% in late March 2010 a record first-quarter low for the region. In the age group, more people found work in the first quarter, pushing the total (102,900) over the 100,000 mark.this drove down unemployment in this age group to 8.4%. Performance in the first quarter of 2010 was thus in keeping with our reference scenario. A number of companies will be exercising caution in the first half of the year, and their investments, although substantial, will be primarily aimed at maintaining existing jobs and upgrading facilities. Therefore, the pace of hiring should gradually pick up in the second half of the year. New opportunities will open up for job seekers due to the impact of various major projects (highways, real estate, new contracts granted in the video game industry and fibre-optic investments by Bell, to name but a few examples. 4

7 Quarterly changes in employment in Quebec CMA In thousand In thousand Q Q Q Q Q years (r) 30 years or older (r) Total employment (l) Sources : Statistics Canada and PÔLE Québec Chaudière-Appalaches The employment level remained high in the region 5

8 3 Residential activity supported the real estate market in the first quarter INVESTMENTS The construction sector is a key element in the economic performance of the Quebec City CMA, as demonstrated once again in the first quarter of Work began on several major projects, thereby contributing to a 35.1% increase in the value of building permits issued, compared with the same period in 2009, reaching $491.6 million. This was a first-quarter record for the Quebec City CMA, topping the $400.4 million recorded in This new record also significantly exceeded the figures recorded at the end of the 1991 and 1996 recessions. (The region recorded an increase of 9.6% in the first quarter of 1992 and a decrease of 23.2% in the first quarter of 1997.) The residential sector was dominant in the first quarter of 2010, with a 62.7% increase in the value of building permits issued, compared with the same period in The number of properties for sale and apartments for rent is still tight, leading to the launch of new residential projects at the beginning of the year. According to the SCHL, the Quebec City region s housing stock grew by 1,125 units between January and March, compared to 491 last year. The number of housing starts for semi-detached homes, row houses and condominiums more than doubled, while that for rental housing grew nearly sixfold. Demand for new properties also held steady in the Quebec City CMA in the second quarter, with housing starts up 23.4 % year-over-year. Overall, 2010 will be a good year for new construction in the region. However, a number of households decided to move up their property purchases to the beginning of the year to take advantage of exceptionally low mortgage rates. A gradual increase in rates could slow residential activity somewhat. The non-residential sector recorded an 11.1% decline in the value of building permits issued in the first quarter of 2010 compared with the same period last year. However, the sector remained very active early in the year. Preparations have already begun on new office building projects. Commercial space was added as the manufacturing sector showed signs of recovery. The non-residential sector s dynamic performance is expected to continue across the region.the low vacancy rate (4.8% in the first quarter of 2010) will be conducive to the construction of new office buildings, while the manufacturing sector will require additional investments to remain competitive. In addition, the residential sector s momentum will favour the expansion of the commercial sector. However, certain constraints could temper the pace of growth in capital expenditures. For example, many temporary government measures aimed at stimulating private investments are about to end or have already been discontinued. In addition, uncertainties remain with respect to the strength of the economic recovery. 6

9 Value of building permits by sector Millions of $ +0,7 % (2,1 %) +62,7 % +266,4 % (82,5 %) +53,5 % +66,9 % (11,6 %) (11,1 %) (76,5 %) +148,1 % (28,6 %) Residential Industrial Commercial Institutional Q Q Q Sources : Statistics Canada and PÔLE Québec Chaudière-Appalaches Number Housing Starts By Type (14,1 %) +41,1 % Single-family dwellings +48,4 % +95,7 % Semi-detached dwellings (47,8 %) +191,7 % (40,8 %) +144,7 % (82,6 %) Row houses Condominiums Rental housing Q Q Sources : Canada Mortgage and Housing Corporation and PÔLE Québec Chaudière-Appalaches +470,9 % 7

10 4 The number of passengers at Quebec City's Jean Lesage Airport rose by 8.3% TOURISM Signs of economic recovery helped to stimulate the tourism industry in the Quebec City CMA in the first quarter of According to the Quebec City Tourism Office, the composite tourism index increased by 6.9 basis points, compared with the same period in 2009, reaching This was due to growth in all of the index s components. The number of visits to stores and sites/attractions recorded annual growth of 14.9 and 12.7 basis points respectively. Improvement was also noted in the areas of hotel occupancy (+7.1) and restaurant visits (+2.5). Quebec City s Jean Lesage Airport also benefited from the resurgence of tourism in early A total of 347,574 people (arrivals and departures) transited through the airport in the first quarter of 2010, representing an annual increase of 8.3%. The rise in crossborder and international flights generated increases in the number of passengers of 16.9% and 1.2% respectively.the number of passengers on domestic flights grew by 13.6% compared with the same period last year. Tourism Indicators for the Quebec Region Restaurant industry meals served evolution index Lodging - room occupancy evolution index Sites and attractions - admissions evolution index Retail stores - transactions evolution index Total tourist activity - aggregate index 0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0 Q Q Sources: Québec City Tourism and PÔLE Québec Chaudière-Appalaches 8

11 Non-residential private investment projects (underway) in the Quebec City CMA Project Investment (millions of $) Sector Description Bell Canada Immeubles Cominar La Capitale Financial Group Redcliff Realty Management GM Développement Desjardins Financial Security Immostar - Place de l'escarpement Telus Hilton Québec Corbec Corporation Kevlar Group Complexe de la Capitale Novik Groupe autos Ste-Foy (Toyota) Teknion Roche Ltd $ Telecommunication Optical fiber network installation 110.0$ Real estate services Construction of an office tower 81.0$ Insurance Construction of an office tower 75.0$ Commercial Galeries de la Capitale expansion 60.0$ Public Construction of an office tower 50.0$ Real estate services Business park development 31.3$ Real estate services Construction of an office tower 30.0$ Real estate services Office building project 27.0$ Accommodation Hotel expansion 25.0$ Metal products Construction of a new plant 22.0$ Real estate services Commercial development 20.0$ Real estate services Construction of an office tower 12.9$ Polymer coating Plant expansion 9.5$ Commercial Motor vehicle dealer upgrade 8.1$ Furniture manufacturing Construction of a distribution center 8.0$ R&D Construction of a multi-purpose building 9

12 Primary economic indicators Quebec City CMA Q Q Q Q Q Seasonally adjusted statistics Real GDP (In millions of 2002 $) 24, , , , ,923.5 Annual change (%) (0.6) (1.1) (1.3) Disposable income per capita ($) 27,904 28,297 28,489 28,546 28,931 Annual change (%) Retail sales (millions of $) 11,009 11,136 11,454 11,640 11,813 Annual change (%) (2.5) (2.1) (0.8) Consumer price index (2002 = 100) Seasonally unadjusted statistics Labour market Active population 412, , , , ,400 Number of jobs, overall 391, , , , ,900 Manufacturing 25,900 31,800 39,200 36,500 32,700 Food processing 3,500 4,600 7,400 7,600 6,200 Chemicals 1,700 1,600 2,100 1,800 2,100 Rubber/plastic products 2,300 3,900 4,100 3,400 NA Metal products 4,800 4,200 3,000 3,000 4,700 Transportation equipment and machinery 1,700 2,900 4,900 4,200 2,400 Computer, electronic and electrical products 1,900 1,700 2,000 2,200 1,600 Construction 21,200 21,800 18,600 18,600 16,000 Services 339, , , , ,500 Public utilities 1,600 NA 3,400 2,000 2,500 Financial, insurance and real estate services 41,900 37,800 34,000 36,900 32,900 Professional, scientific and technical services 26,600 29,200 26,800 28,700 28,800 Trade 67,100 74,200 73,000 70,800 61,200 Transport et entreposage 13,100 9,400 10,400 13,700 13,200 Transportation and storage 24,600 24,600 22,100 24,500 29,300 Public administration 37,400 36,100 37,800 38,800 41,900 Unemployed persons 21,400 18,400 21,100 19,000 20,500 Unemployment rate (%) Participation rate (%) Employment rate (%) Real estate Housing starts 491 1,662 1,760 1,600 1,125 Single-family dwellings Semi-detached and row houses Condominiums Rental housing Resale market 1,815 2,382 1,764 1,869 2,181 Residential vacancy rate (%) Desjardins Affordability Index Office building vacancy rate (%) Value of building permits (thousands of $) 363, , , , ,603 Commercial (thousands of $) 105, , , ,848 93,508 Industrial (thousands of $) 6,827 6,398 22,226 10,699 10,477 Institutional (thousands of $) 24,161 32,612 32,512 15,719 17,246 Residential (thousands of $) 227, , , , ,372 Bankruptcies Personal bankruptcies Business bankruptcies Tourism Total tourist activity - aggregate index Lodging - room occupancy evolution index Sites and attractions - admissions evolution index NA NA NA NA NA Retail stores - transactions evolution index Restaurant industry - meals served evolution index NA NA NA NA NA Hotel occupancy rates (%) Overall number of passengers at Quebec City Airport 320, , , , , NA : Not Available Sources: Conference Board of Canada, Canada Mortgage and Housing Corporation, Institut de la statistique du Québec (Quebec Statistics Institute), Quebec Federation of Real Estate Boards, Office of the Superintendent of Bankruptcy, Altus Group, Québec City Tourism, Statistics Canada, Quebec City Airport, Desjardins Group and PÔLE Québec Chaudière-Appalaches

13 Capitale-Nationale (Quebec's National Capital region) Q Q Q Q Q Données désaisonnalisées 376, , , , , , , , , ,200 25,300 28,400 34,000 29,400 27,900 3,600 4,100 6,800 5,500 3,500 NA NA 2,300 1,800 2,400 1,600 2,700 2,300 2,100 NA 4,000 3,000 2,400 2,800 4,200 1,900 3,100 1,900 NA NA NA NA NA 1,900 NA 17,100 19,200 15,700 15,100 11, , , , , ,900 1,900 1,700 3,900 2,100 2,500 24,600 28,300 24,400 28,700 29,300 24,600 28,300 24,400 28,700 29,300 58,000 65,300 62,700 61,000 55,800 13,000 10,300 10,600 12,200 10,400 24,400 23,900 22,400 21,900 25,900 35,500 33,100 34,400 36,700 36,200 20,900 19,000 19,900 19,100 20, , , , , ,310 88, ,004 91,051 72,354 72,205 3,872 6,210 17,775 9,479 10,649 24,722 28,610 30,107 15,499 17, , , , , , NA NA NA NA NA NA : Not Available Sources: Conference Board of Canada, Canada Mortgage and Housing Corporation, Institut de la statistique du Québec (Quebec Statistics Institute), Quebec Federation of Real Estate Boards, Office of the Superintendent of Bankruptcy, Altus Group, Québec City Tourism, Statistics Canada, Quebec City Airport, Desjardins Group and PÔLE Québec Chaudière-Appalaches 11

14 GLOSSARY Census metropolitan area (CMA) Area formed by one or more neighbouring municipalities located around a major urban centre. To constitute a CMA, an urban centre must have at least 100,000 inhabitants. To constitute a census agglomeration, an urban centre must have at least 10,000 inhabitants. Unemployed Individuals who are available to work, have no paid employment and actively looking for work. Active (working) population Civilian population aged 15 years old and higher not living in an institution and or on a reserve, either employed or unemployed. Participation rate Active population expressed as a percentage of the total population aged 15 years and older. Employment rate Number of active workers expressed as a percentage of the total population aged 15 years and older. Unemployment rate Number of unemployed expressed as a percentage of the active population. Consumer price index (CPI) Measure of the changes in the price paid by consumers for a basket of goods and services. Gross domestic product (GDP) The total unduplicated value of the goods and services produced in an economic area (such as a region) during a given period, regardless of the ownership (foreign/domestic) of the production factors. GDP at basic prices corresponds to the GDP calculated at market prices, less tax deductions applicable to goods, plus consumer subsidies. Disposable personal income Personal income less direct personal income taxes, social insurance contributions and other current transfers to public administrations. 12

15 Capital investments Capital expenditures related to new construction projects and major improvements to existing buildings, in addition to purchases of new machinery and equipment. These expenditures also include individual expenditures on residential construction, but do not include purchases of land, existing buildings or used machinery or equipment (unless imported). Value of building permits Corresponds to the value of planned building projects in the non-residential sector, the number of authorized dwelling units and the value of building projects in the residential sector. Desjardins affordability index Measure used to determine whether the housing price level is sustainable by comparing the cost of owning a home compared with household incomes. The value of the index is obtained by calculating the ratio between average disposable household income and the income level required by financial institutions for financing purposes. Vacancy rate The percentage of apartments and row houses unoccupied and available for rent. Tourism index The baseline index of 100 corresponds to the relation between the sum of the results of a sample taken during a given month and the sum of the results of the same sample for the same month in the baseline year. Hotel vacancy rate The relation between the number of occupied hotel rooms and the number of available hotel rooms in a given area.

16 In order to fulfil its various roles, POLE is reliant on financial support from the Government of Quebec, Economic Development Canada and the City of Quebec, as well as from a vast network of public and private partners.