Growth expected to cool from unsustainably high 2021 rate. Quebec’s expansion outperformed that of rest of Canada last year—in part because of the arithmetic of quarterly growth (see our analysis here)—and was already easing to close out 2021. Slightly earlier implemented omicron variant restrictions than in other provinces may further weaken the handoff into this year.
Labour constraints to weigh on expansion. Quebec’s Q3-2021 job vacancy rate approaching 7% was a provincial record and trailed only that in British Columbia; that speaks to the severity of labour shortages in La Belle Province. Omicron’s spread will almost certainly contribute to further reluctance to return to work in the high-contact sectors most impacted by lockdowns; though rising immigration levels and retention of temporary workers may help fill vacancies in other industries over time.
Housing market to cool significantly. MLS unit sales plunged to such an extent in H2-2021 that it drove the only annual contraction of any province last year (chart 1), and residential building investment clearly slowed in late 2021. Easing of population inflows from Ontario should contribute to further moderation alongside rising interest rates and capacity limits in the construction sector, though strong household balance sheets relative to other large provinces may shield against reduced demand impacts from higher borrowing costs.
Government a contributor to growth. Quebec’s mid-year update forecast the largest percentage program spending increase in any province (11.8%) in FY22; the planned 19% FY23 boost to infrastructure outlays in Budget 2021 was also the provincial leader.
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