After a strong first half of the year, “Quebec’s economy will be rocked by the difficulties faced by households and businesses over the next three to six months,” warn economists at the Desjardins Group when updating their leading index (IPD) published on Friday morning.
Posted at 11:08 am
“Although economic growth has been strong until recently, the recent deterioration in the DLI signals that Quebec will not escape the economic and financial turmoil that is deepening around the world. For now, the fall in the DPI points to a sharp deceleration in real GDP growth from the second half of 2022,” writes Hélène Bégin, Senior Economist at Desjardins.
“After a strong start to 2022 with first quarter annualized real GDP growth of 6.9%, there are increasing signs that the Quebec economy is running out of steam,” continued Ms.me Begin.
“Of the fifteen statistics that go into calculating the IPD, most showed a decline in May, particularly those related to the housing sector and businesses.”
real estate, business
Among other things, Desjardins Senior Economist notes that “the ‘residential’ component of the IPD, which was the first to fly the yellow flag since last year, fell further in May. »
“The residential real estate market has undergone a change of direction since the spring. Continued increases in mortgage rates will continue to cool the housing market and contribute to a significant slowdown in Québec’s economic growth. »
In addition, the Desjardins economists note in the “business component” of their predecessor index that it continues its “downtrend”. »
“The world trade index, a good export barometer, is weak. Companies that have had to adapt on multiple levels since the start of the pandemic will also have to deal with the growing difficulties of the global economy,” explains Hélène Bégin, lead author of the IPD update at Desjardins.
Still positive on the other hand, note Mme Bégin, the ‘household component’ of consumer spending in the Desjardins Precursor Index remains in a good position.
“The unemployment rate remains low at 4.3% in June. Also the annual increase in the hourly wage [salaires] reached 7.5% in Quebec in June. However, this increase remains lower than the inflation rate, which rose to 8.0% in June,” noted the Senior Economist at Desjardins.
Still, according to Hélène Bégin, “the impact of high inflation and the rapid increase in interest rates should soon be felt on consumer spending” by Quebec households.