Given the fact that Montréal’s unemployment rate, 9.6% in August, is just a shade below the national average (9.7%), it is clear that the city’s economy has been hard hit by recessionary conditions that have enveloped the country.

Having said this, there are signs that following a sharp drop early in the year, the Montréal economy has not contracted as rapidly as other census metro areas (CMAs) across Canada.

For example, while employment for the country as a whole is down by 1.7% year over year in August, Montréal’s workforce has shrunk by a more modest 0.7%.

Across major industrial sectors, employment in construction has fallen (-13% year over year), followed by manufacturing (-6.7%) and information services (-8%).

However, these declines have been partly offset by job gains in public administration (+11.8%); business, building and other support services (+11.0%); education services (+1.4%); and accommodation and food services (+1.0%).

The above pattern of job creation appears to have had a positive impact on the housing market, where average prices of existing homes are up by 3% year over year in July versus a more muted 0.6% year over year for the country as a whole.

Also, housing starts in Montréal (-25% year to date) are down less than they are at the national level (-45%).

Looking forward, although Montréal appears to be suffering less than a majority of CMAs in the country during the current downturn, its economic health remains fragile.

For example, according to Manpower Canada, Montréal’s hiring climate in the fourth quarter is “modest” based on a net employment outlook of 1%, a full six percentage points below its year-ago level.

Finally, while there are signs, based on stronger exisiting home sales and rising institutional building permits, that construction activity will probably stabilize in the near term, rising commercial and industrial vacancy rates suggest that non-residential building will continue to be a drag on overall building activity well into 2010.