After a strong first half of the year, “Quebec’s economy will be shaken over the next three to six months by the difficulties of households and businesses,” warn Desjardins Group economists when updating their precursor index (IPD), published Friday morning.
Posted at 11:08 a.m.
“Even though economic growth has been vigorous until very recently, the recent deterioration of the DLI signals that Quebec will not escape the economic and financial turbulence that is intensifying worldwide. For now, the decline in the DPI points to a sharp slowdown in real GDP growth from the second half of 2022,” writes Hélène Bégin, senior economist at Desjardins.
“After getting off to a strong start to 2022, with annualized real GDP growth of 6.9% in the first quarter, the signs of the Quebec economy’s economy running out of steam are mounting,” continued Ms.me Begin.
“Among the fifteen statistics that enter into the calculation of the IPD, most showed a decline in May, in particular those related to the residential sector and businesses”.
Real estate, businesses
Among other things, points out the senior economist at Desjardins, “the ‘housing’ component of the IPD, which was the first to raise the yellow flag since last year, sank further in May. »
“The residential real estate market has changed direction since the spring. The ongoing rise in mortgage rates will further cool the housing market and contribute to a significant slowdown in economic growth in Québec. »
Moreover, in the “business component” of their precursor index, Desjardins economists note that it is continuing its “downward trend. »
“The global trade index, a good barometer for exports, is weak. Businesses, which have had to adjust on several 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. .
Consumers
On the other hand still positive, note Mme Bégin, the “household component” of consumer spending in the Desjardins Precursor Index remains in a good position.
“The unemployment rate remains at a low level, at 4.3% in June. Also, the annual increase in hourly compensation [salaires] reached 7.5% in June in Quebec. However, this increase remains lower than the inflation rate, which climbed to 8.0% in June,” noted the senior economist at Desjardins.
Nevertheless, according to Hélène Bégin, “the effects of high inflation and the rapid increase in interest rates should soon be felt on consumer spending” by Quebec households.