The results of the last Québec provincial election significantly reduced the threat of separation and, as a result, the province is in the midst of an economic renaissance.

Québec is Operating close to Full Capacity
As La Belle Province enters 2008, it is operating closer to full capacity than it ever has before. For example, the employment rate in the province is at a record high and the unemployment rate is close to the lowest it has been in more than 30 years.

What is particularly remarkable is that, over the past 12 months, the provincial economy has added 109,500 jobs despite a 52,800 drop in manufacturing employment.

Excluding manufacturing, the majority of the province’s key industrial sectors have added jobs. Over the past year, accommodation and food services employment increased by +33,900; other services by +32,900; trade by +19,700; agriculture by +14,900; public administration by +14,500; construction by +12,100 and education services by +10,500.

Strong Housing Market in 2007
Housing starts in 2007 were exceptionally high in Québec, thanks to a combination of five factors: strong employment growth; increased investor and consumer confidence; rising disposable incomes; an aging population; and comparatively low interest rates.

While starts will probably moderate in 2008, housing demand will continue to be supported by strong fundamentals. For the year, Reed Construction Data expects 45,000 residential starts compared to an estimated 54,000 in 2007.

Total non-residential construction was up 5% in 2007, thanks to strength in commercial (+10.5%) and institutional construction (+9.0%). Industrial construction was weaker, due in large part to flagging manufacturing profits.

Outlook Strong for Domestic Demand, but Worries about the U.S. Market
Looking ahead, the recent strong growth in three key areas — employment, income and government spending on infrastructure — should help domestic spending to underpin Québec’s growth during the first half of the year and support both residential and non-residential construction.

The province’s health in the second half of the year is less certain, however, given that the United States, which imports 25% of Québec’s total output, is now facing increasing risk of recession.

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