Something is wrong with the Quebec economy

I generally don't pay much attention to the month-to-month changes in the provincial employment numbers, but there's something going on in Quebec.

Canadian employment growth has been slow in the second half of 2011: employment and hours worked in December were roughly at the same levels they were in July. But - as ever - there have been significant regional variations around the national average. Here are the regional changes in levels of employment since the peak in October 2008:

And here are the changes expressed in terms of per cent changes from the peak:

 

Quebec employment peaked in May, and it has fallen by 2% in the seven months since then. To put this number into context, Canadian employment fell by 2.5% in the nine months following the October 2008 peak.

One or two months of bad numbers could be a statistical glitch. But a 2% drop in seven months is something for policy-makers in Quebec City - and maybe in Ottawa - to worry about.

I'm going to see what I can do to figure out what's going on.

Comments

[Andrew F]

Any evidence on the ground of a recession in Quebec?

[Stephen Gordon]

Not that I know of. But I live in Quebec City, where the unemployment rate is among the lowest in Canada. Also, I'm a university professor; all my data are second-hand.

Even anecdotes would be useful at this point.

[John]

what about the union conflict in Alma...

plus montreal is not doing well... 8.5% unemployment while it is below 5% in Quebec...

[Frances Woolley]

What happens if you break it out by age group? Quebec and the Atlantic provinces are aging more quickly than the Western provinces, also the birth rate has been low for many years (higher now because of child care etc). Also perhaps pension/retirement provisions are different - though probably QPP and CPP rates are pretty similar?

Also perhaps try breaking out self-employed? Self-employment typically goes up in the kind of economic climate we have now, and then goes down as bigger firms start to hire on workers.

[Nick Rowe]

I haven't heard of anything here in West Quebec.

But it must be Montreal? Only Montreal has a big enough population to affect the whole province. It would take an employment disaster in a smaller population area to have that sort of effect at the aggregate level.

[Stephen Gordon]

Yes, especially since things are holding up well in Quebec City.

Another possible culprit is something going awry with the seasonal adjustment - but that would have to be a *huge* error to generate swings that big.

[Normand Leblanc]

This year, more than previous year, many road construction sites were open until decembre. All those people laid off + the fact that any construction worker that haven't worked all year is entitled to unemployment benefit during the 2 wks holiday at christmas. Most will be rehired right after the holidays.

I can think, as an exemple, at the construction of McGill University Hospital (COSUM). There is 3000 construction workers on the site and if one trade ask to be laid-off for Christmas...all the trades will ask for the same think. It happen to me with some regular employees (10+ yrs) asking to be laid-off.

Being from the Montreal area, I haven't notice anything special!

[Evan]

My first thought would be a measurement error or the like. Perhaps a sampling error in both of the last 2 months? Unlikely, sure, but possible.

[Determinant]

CPP and QPP are nearly identical in benefit provision Frances, the difference is negligible.

[EvilHenryPaulson]

Strikes & Lockouts are a strong possibility for causing such variation

[Jim Sentance]

The Employment by major industry groups, seasonally adjusted, by province data for Quebec from Statscan shows December over December declines in most of the goods producing sectors, in total accounting for about 2/3 of the 50 thousand jobs lost over the year. Some service sectors were also down large numbers of jobs, Finance, insurance, real estate and leasing, Health care and social assistance, and Information, culture and recreation all shedding in excess of 10 thousand jobs.

http://www40.statcan.ca/l01/cst01/labr67f-eng.htm

[John Dykeman]

Montreal and region are the engine of Quebec, Big Pharma is closing down (Merck, Johnson and Johnson).

Quebec City doesn't contribute to the tax base, only taking (generous pensions, bloated civil service),

Contruction is booming in Montreal, so maybe that is a good sign (Hwy 30, new hwy to VT from St. Jean, new hospitals and downtown office construction).

We need to have less corruption in unions for public construction projects, and show the world that even though we have more union jobs they are not against business.

Companies that make profits, contribute to tax (as do the workers).

Our civil service and education and health networks have to be funded from somewhere.

JD, Kirkland

[Jacques René Giguère]

But where is the evidence on the ground?
FWIW,here on the North Shore, both papers have the same front page: housing crisis due to an influx of workers. The city is discussing leasing a cruise ship to provide temporary shelter to incoming workforce. On the regional Radio-Canada station this afternoon, service stations, auto dealers and various garages going public complaining about losing their staff to the mines. The tire shop where I go is short 2 of its usual 7 mechanics.
In october, I had to to do a same-day-trip to Montréal as no hotel rooms were available downtown for an overnight stay.
Health care and social assistance are probably sampling errors. There is no visible signs of lay-off in these public sectors.

However, forestry is now finally giving up. But enough to affect provincial statistics?

John Dykeman: Quebec City has oil refining ( now bigger than Montréal since the Shell closing), pharmaceuticals, optronics and tourism. Tourism is strong enough that, in addition to the usual Newark ,Chicago and Detroit hubs, since last spring flights have been added to Cleveland, Washington-Dulles and Philadelphia. I took the flight to Philly-and-back last summer on my way to Ohio and the flights were packed with americans. And on a visit to the Musée de la Civilisation during the holidays, in addition to franch and english, the museum was packed with foreigners from half a dozen language groups.
And most the public service is in Montréal...

Stephen: thanks for allowing a rationnal discusion by posting here. The comments at G&M is mostly at the electron-murdering, neuron-killing level.

Thanks for

[JP Koning]

Some sort of correlation between the performance of the Habs and the Quebec economy?

[Jacques René Giguère]

In that case we would already have all been dead and eaten by zombies.

[Determinant]

Game: Which one is the Zombie?

The Ontario Economy or the Toronto Maple Leafs?

[Jacques René Giguère]

ON can still come back to life. So it's a living dead.
The Leafs are beyond hope.

[Anonymous]

I work for an engineering firm in the Montreal area, and for the past several months I've noticed a marked slowdown in municipal infrastructure projects. I have a few theories, which I can list here:
- Fewer provincial subsidies for infrastructure projects (because of belt-tightening in Quebec City)
- Municipalities are being financially squeezed by defined-benefit public service pensions that assume an 8% rate of return. The difference has to be made up from general revenues, and the easiest expenditure to cut (politically) is infrastructure spending.
- and finally, as a result of the slowdown, engineering and infrastructure construction companies are bidding very low. This helps politicians to claim they are "solving" the so-called "collusion" problem.

[Jacques René Giguère]

Anonymous:
-The infrastructure project that were launched are indeed coming to an end. But that wouldn't reflect on mnufacturing.
- The payments into pension plans have not begun. There is a commission set up to study the problem ( How we will not make the promised payment and let the taxpayers enjoy the tax break they got with the contributions holidays)
- Even if engineer bureau and contractors bid low, if the work is done there is no impact on employment.

[Andrew]

Construction is a poor way to build GDP and employment . When you back out the cost of debt your right back where you started . Manufacturing is the critical engine and we gave that away to Asia .
If every piece of clothing you wear , every pot cutlery and dish in your house is from outside production , give up , your going down .

[anonymous]

Im in the home fashions and decor industry and my retail sales for the last trimester have dropped 40% from last year, where most of the damage was done in december.I noticed something was wrong when several of my wealthier customers commited on purchasing thousands of dollars of merchanding only to call me weeks later to mention thier projects were put on hold till later....i am posting primarly concerned if my situation is isolated or has recession hit hard ,as no declarations from governments have been made.