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May 22, 2015 QUEBEC Real GDP pulls back in February highlights •Real GDP by industry ticked down 0.1% in February after rising the previous month. January’s figure was also revised from 0.2% to 0.3%. For the first two months of the year, the total annual increase is 1.3%. •Electricity production drove growth by utilities, which made a big contribution to real GDP growth. Without this sector, economic activity posted a -0.4% decline for February. •Goods production fell 0.6% in February. Several sectors contracted sharply, including construction and manufacturing. •The service industry edged up, gaining a monthly 0.1%. Retailing, finance and insurance, and business services posted the strongest growth. The real GDP is struggling to post several gains in a row In billions of 2007 dollars % monthly change Real GDP 320 1.4 1.1 0.8 310 0.5 0.2 300 -0.1 -0.4 -0.7 290 -1.0 -1.3 280 2008 -1.6 2009 2010 2011 Change (right) 2012 2013 2014 2015 Level (left) Sources: Institut de la statistique du Québec and Desjardins, Economic Studies cOMMENTS We had expected the economy to tick down in February. Although the retail sales figures Statistics Canada published for the month had turned around, other data was down in February, including manufacturing sales, exports and housing starts. The winter’s extraordinarily cold weather seems to have slowed many industries, including construction. On the other hand, it stimulated electricity production in Contribution to real GDP growth in February Public sector* Services sector Retail trade Wholesale trade Manufacturing Construction Utilities Goods sector Mining and oil Agriculture and forestry -0.3 -0.2 The harsh weather also sapped the U.S. economy in the first quarter. There, real GDP posted a weak annualized 0.2% increase. In Canada, the adverse impact of low oil prices on the economies of oil-producing provinces worsened the unfavourable context, which should limit real GDP growth to an annualized 0.3%. March looks fairly solid for Quebec’s economic growth, however. Retail sales jumped 1.0%, while manufacturing sales and exports went up of more than 6.0%. Other Financial sector Quebec. Overall, the carryover for real GDP is fairly slight for the first quarter, at an annualized increase of 0.4%. -0.1 0.0 0.1 0.2 0.3 Implications: Despite February’s downtick, Quebec’s annualized real GDP growth should be above 1% for the first quarter. The rebound expected in North America for the second quarter should make itself felt in Quebec, where the pace should pick up to hit the 1.7% target for growth in 2015. In % Hélène Bégin Senior Economist * Education, healthcare and public administrations. Sources: Institut de la statistique du Québec and Desjardins, Economic Studies François Dupuis Vice-President and Chief Economist Hélène Bégin Senior Economist Benoit P. Durocher Senior Economist 418-835-2450 or 1 866 835-8444, ext. 2450 E-mail: [email protected] Francis Généreux Senior Economist Note to readers: The letters k, M and B are used in texts and tables to refer to thousands, millions and billions respectively. I mportant: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. The data on prices or margins are provided for information purposes and may be modified at any time, based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. The opinions and forecasts contained herein are, unless otherwise indicated, those of the document's authors and do not represent the opinions of any other person or the official position of Desjardins Group. Copyright © 2015, Desjardins Group. All rights reserved.