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Montreal’s Economic Outlook. Is the Revival of the Manufacturing Sector Here?

Pedro Antunes, Deputy Chief Economist

The Conference Board du Canada April 5, 2016

2

• Quebec’s economy is slow to recover following three years of very weak

growth.

• A lack of investment these past few years is hindering the Province’s

ability to grow its exports.

• Despite mixed signals, we expect private investment to improve in 2016.

• Household spending will remain strong and help support overall

economic growth.

• Government may contribute more than expected to economic growth.

The ball is in the camp of the federal liberal government as we await

details about additional infrastructure spending.

Quebec Outlook

3

0

100

200

300

400

500

600

700

800

900

2011 2012 2013 2014 2015 2016(intentions)

Mineral Exploration Expenditures. millions $

Sources: Natural Resources Canada.

4

74

76

78

80

82

84

86

88

90

Quebec’s Industrial Capacity Utilisation percent

Sources: The Conference Board of Canada, Statistics Canada; weighted average of capacity utilization rate by industry based on Quebec’s

industrial share of national.

5

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

End of Deficits in Quebec budget deficits, billions $

Sources : The Conference Board of Canada, Quebec Budget 2016.

6

-1.0

0.0

1.0

2.0

3.0

03 04 05 06 07 08 09 10 11 12 13 14 15f 16f 17f

Real GDP growth Quebec. per cent change.

Sources: Statistics Canada; The Conference Board of Canada.

.

7

-2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0

Calgary

Edmonton

Regina

Saskatoon

Ottawa

Québec

Montréal

Hamilton

Winnipeg

Victoria

Toronto

Halifax

Vancouver

Canada (1.6)

2016 real GDP Growth by CMA. per cent change, basic prices, $2007.

Source: The Conference Board of Canada.

8

0.0 1.0 2.0 3.0 4.0 5.0

Edmonton

Hamilton

Montréal

Calgary

Ottawa

Québec

Victoria

Halifax

Toronto

Regina

Winnipeg

Saskatoon

Vancouver

Canada (2.4)

Source: The Conference Board of Canada.

2017 real GDP Growth by CMA. per cent change, basic prices, $2007.

9

-6

-4

-2

0

2

4

6

8

07 08 09 10 11 12 13 14 15f 16f 17f

Construction Sector Output Growth. Montreal CMA.

Source : The Conference Board of Canada.

10

-10

-8

-6

-4

-2

0

2

4

07 08 09 10 11 12 13 14 15f 16f 17f

Manufacturing Sector Output Growth. Montreal CMA.

Source : The Conference Board of Canada.

11

6.5

7.0

7.5

8.0

8.5

9.0

9.5

-1.0

0.0

1.0

2.0

3.0

4.0

07 08 09 10 11 12 13 14 15 16f 17f

Employment Unemployment rate

Montreal Labour Market Employment growth, left axis, per cent; unemployment rate, right axis, per cent

Sources: Statistics Canada; The Conference Board of Canada.

12

60

70

80

90

100

110

120

130

140

150

Quebec’s Index of Consumer Confidence 2014=100

Sources: Statistics Canada; The Conference Board of Canada.

average of the past 10 years

13

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Real Household Disposable Income Montreal CMA, per cent change.

Sources: Statistics Canada; The Conference Board of Canada

14

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

07 08 09 10 11 12 13 14 15 16f 17f

Retail Sales. per cent change

Sources: Statistics Canada; The Conference Board of Canada.

.

15

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2015e 2016f 2017f

Overnight visits Spending

Quebec Overnight Visits and Total Spending by Tourists. (per cent change)

Sources: The Conference Board of Canada; Statistics Canada.

.

16

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

90 92 94 96 98 00 02 04 06 08 10 12 14 16f

Population Growth. Montreal CMA.

Sources : Statistics Canada; The Conference Board of Canada.

17

0

10

20

30

40

50

60

70

80

05 06 07 08 09 10 11 12 13 14 15 16

Sellers market

Buyers market

Balanced market

Source : Fédération des chambres immobilières du Québec.

Sales to Listing Ratio. Montreal CMA.

18

60

70

80

90

100

110

120

130

120,000

170,000

220,000

270,000

320,000

370,000

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

existing (left axis) new (right axis)

Sources : Statistics Canada; Fédération des chambres immobilières du Québec.

Existing Home Prices and New Housing Price Index. Montreal CMA, $, 2007=100.

19

0

5

10

15

20

25

07 08 09 10 11 12 13 14 15 16f 17f

multiples single detached

Housing Stars. Montreal CMA, 000s.

Sources : CMHC Time Series Database; The Conference Board of Canada.

20

0

100

200

300

400

500

600

Source : Statistics Canada.

Non Residential Construction Permits Montreal CMA, millions $, seasonally adjusted.

21

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

07 08 09 10 11 12 13 14 15f 16f 17f

Real GDP Growth. Montreal CMA.

Source : The Conference Board of Canada.

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• Montreal’s real GDP growth should average about 2 per

cent in 2016-2017.

• Infrastructure spending is promising.

• Private investment is needed to add wind to the sails of the

manufacturing sector.

• Montreal’s residential real estate market should remain

stable.

Implications

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