ECONOMIC STUDIES | OCTOBER 28, 2020 ECONOMIC VIEWPOINT Overview of Quebec’s Urban Areas for 2020–2021 Because of our current public health and economic crisis, as GRAPH 1 for Quebec as a whole, economic growth in urban areas will be Economic growth in Quebec’s urban areas should rebound in 2021 down in 2020 (graph 1). The Laval area should record the smallest 2020f 2021f decline whereas, in contrast, the Laurentides will record the largest Laval -4.5 7.3 downturn. One of its drivers, the aerospace industry, was hard hit Quebec as a whole -4.8 6.3 by the pandemic and will likely take some time to get back on its Lanaudière -4.9 6.7 feet. This is also why its economic recovery will be weaker than Quebec’s in 2021. Montérégie -5.0 6.4 Montréal -5.5 6.8 Although COVID-19 hit Montréal and its neighbouring cities Laurentides -5.7 5.0 hard, their economies generally stood up to the shock well. Their -7 -6 -5 -4 -3 4 6 8 economic structure, focused on services, made telecommuting Ann. var. in % Ann. var. in % easy, which helped businesses quickly adapt to the new situation. f: Desjardins forecasts Source: Desjardins, Economic Studies Overall, urban regions should recover at a slightly faster pace than the average for Quebec; the pace will be uneven, depending on the region. However, the economic rebound expected for 2021 could be downgraded if the pandemic’s second wave leads to tougher restrictions. This is currently the greatest risk to the forecast scenario. The COVID 19 crisis is still affecting many countries and uncertainty remains elevated. MAP 1 Quebec’s regions Nord-du-Québec Côte-Nord Saguenay– Lac-Saint-Jean Gaspésie– Îles-de-la-Madeleine Abitibi- Bas- Témiscamingue Mauricie 1 – Resource regions Saint-Laurent Lanaudière Capitale- 2 – Manufacturing regions Laurentides Nationale 3 – Urban regions Outaouais Chaudière- 4 – Capital regions A - Laval Appalaches D B - Montréal C - Montérégie C A Estrie D - Centre-du-Québec B Source: Desjardins, Economic Studies François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Deputy Chief Economist • Chantal Routhier, Senior Economist Desjardins, Economic Studies: 418-835-2450 or 1 866-835-8444, ext. 5562450 • [email protected] • desjardins.com/economics NOTE TO READERS: The letters k, M and B are used in texts and tables to refer to thousands, millions and billions respectively. IMPORTANT: 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 © 2020, Desjardins Group. All rights reserved. ECONOMIC STUDIES Demographic Growth Will Remain Stronger than for GRA Quebec as a Whole he relacement inde will remain low Based on the projections of the Institut de la statistique du Replacement index Labour replacement Québec (ISQ), on average, in 2020 and 2021, urban population index: In % growth will be slightly below that of the last two years. However, 151 20-29 years x 100 55-64 years its pace will outstrip the province’s (graph 2). The urban areas 140 128 130 will grow at the same relative pace, with increases ranging from 115 109 110 97 92 90 92 86 83 84 0.8% to 1.0% for 2020 (+0.7% for Quebec). 90 78 74 73 73 68 67 65 GRA 40 Poulation growth will remain relatiel sustained 2006 2016 2021f Average 2018-2019 Average 2020f-2021f Quebec as a whole Montréal Laval Lanaudière Laurentides Montérégie Montérégie 0.9 0.8 f: Institut de la statistique du Québec projections, based on the baseline scenario for 2019 Laurentides 1.2 1.0 Sources: Institut de la statistique du Québec and Desjardins, Economic Studies Lanaudière 1.0 0.9 The Employment Market Should Recover More Quickly Laval 1.0 0.9 than in Quebec as a Whole Montréal 1.5 0.8 The employment markets are gradually regaining the lost Quebec as a whole 0.9 0.7 ground, but it will take some time for all of the urban areas to return to pre-crisis levels (graphs 4 and 5 on page 3). Businesses, 0 1 2 0 1 2 Ann. var. in % Ann. var. in % particularly merchants, restaurants and retailers, progressively f: Institut de la statistique du Québec projections, based on the baseline scenario for 2019 re-opened as the lockdown slowly eased, but they are not all Sources: Institut de la statistique du Québec and Desjardins, Economic Studies operating at full capacity. The new public health measures, such as social distancing, play an important role. Save for Montréal, migration (arrivals minus departures) will be the primary source of population growth between now However, the situation remains particularly difficult in downtown 1 and 2021, while natural growth (births minus deaths) will have a Montreal, which saw a 92% decline in traffic in August. This less significant impact. In Montréal, it is the opposite: its natural situation is curbing employment’s recovery in Montréal. growth will remain strong and sustained, whereas its balance of migration will be close to zero. Also according to ISQ projections, Among the key economic drivers are education, health care and in the coming years, the migration balance will tend to stabilize social services, the finance and insurance industry, real estate and in Laval, Lanaudière, the Laurentides and Montérégie, while leasing services, transportation equipment manufacturing and improving in Montréal. the wholesale and retail trade industries. For many municipalities around the major centres, agriculture and forestry are important Like elsewhere in Quebec, these regions will have to tackle economic activities. The speed of the recovery will vary the challenge of replacing labour (graph 3). Their labour force depending on the sector (graph 6 on page 3). replacement indexes have been declining for several years now, putting pressure on the employment market, particularly by The tourism industry is also a major driver for urban areas. It closing the gap between the labour demand and supply. For will take time to recover and could result in other layoffs and example, the Laurentides’ index will be at 67% in 2021. In other business closures. The data shows that Quebec tourists have words, for each group of 100 workers between the ages of been drawn to resorts and vacations in nature to the detriment 2 55 and 64 that leaves the labour market, there will be 67 people of the major centres, which were deserted, especially Montréal. who are of age to replace them (20 to 29). The index will To mitigate the scarcity of tourists and workers in urban centres, therefore drop 23 points compared with 2006. since July 18, private-sector employers have been allowed to bring their employees back to the office. However, maximum Montréal’s situation is different, as its replacement index is one occupancy is 25%. of the highest in Quebec. Still, attracting and retaining workers are growing challenges on the Island of Montreal, with many businesses vying to attract the best talent. Among other things, 1 Baisse de 92 % de la fréquentation du centre-ville de Montréal, La Presse, this is due to the ongoing poor fit between worker supply and September 16, 2020. (Viewed September 16, 2020). demand in the territory. 2 Montréal expects to bring in a mere 1 million tourists this year, rather than the regular 11 million visitors, not to mention the cancellation of sporting and cultural events, including the many festivals. Source: Les restaurants et les bars en arrachent, La Presse, July 26, 2020. (Viewed July 26, 2020). OCTOBER 28, 2020 | ECONOMIC VIEWPOINT 2 ECONOMIC STUDIES GRA GRA nemloment rate in urban areas in and 2021 Table o outloos or emloment growth nemployment rate In EMIC EM-E INDUSTRIA ECTORS ICS) EERY OUTLOOKS Ma-ecember 2021-2022 15 griculture, fishing and auaculture table table Forestry, lumber, paper and furniture nfavourable nfavourable 10 Transportation euipment nfavourable nfavourable holesaling table table 5 Retailing nfavourable table 0 Transportation and warehousing nfavourable nfavourable 2019 f f 20 Finance and insurance table table uebec as a whole Montral aval anaudire aurentides Montrgie Real estate and leasing services table table rofessional, scientific and technical services table ood Educational services ood ood f esardins forecasts ealthcare and social assistance table ood ource esardins, Economic tudies Arts, entertainment and recreation Difficult Unfavourable Accommodation and food services Difficult Unfavourable GRA 1 onthl emloment growth in EE In the “Economic Recovery” section, the estimate of employment recovery is established according to the EIONS EPLOYME E. MAR.2 APR.3 MAY4 JUN. JUL. AUG. ET. following considerations The employment recovery will be strong The employment recovery will be eel Good Unfavourable 4,364.8 4,289.8 4,023.0 3,826.5 3,800.4 3,992.4 4,125.5 4,201.7 and rapid.