Quebec: Real GDP Flat in October

The Institut de la statistique du Québec (ISQ) reports that October real GDP at basic prices was flat in Quebec, as in Canada, after a 0.4% advance in September (Canada +0.2%) following a 0.7% retreat in August (Canada +0.4%). Goods production contracted 0.2% in October, led down by declines in utility output (−1.6%, including a drop in electricity output), construction (−1.0%) and mining (−0.5%). Manufacturing production edged up 0.1% despite declines of 10% in machinery output and 4.8% in primary metals. Output of services was up 0.1%, as advances in professional, scientific and technical services (+1.2%) and in finance, insurance and real estate services (+0.5%) more than offset a third consecutive monthly retreat in wholesale trade (−1.5%).

OPINION: Statistics Canada reported a startling loss of 69,500 jobs in Quebec in the fourth quarter, a bloodletting not seen since the recession of the early 1980s. The big question is whether October’s flat GDP is a prelude to November and December contractions corroborating the job losses. At this point, two 0.7% rises in retail sales in October and November, increases in existing-home sales in the same months, and November and December rises in housing starts suggest that the answer is no, as
do the Canadian Federation of Independent Business reports that the confidence of its Quebec members rose throughout Q4. The only declines in November were of nonresidential building permits and wholesale sales. After one month of Q4 data, quarterly GDP is running barely above Q3 (bottom chart). Tomorrow will bring an additional indicator in the form of Quebec’s international trade balance for November. We will also be watching the January reading of the Conference Board consumer
confidence index, which showed a decline in December.