Québec: economic activity picked up in January

January already seems a long time ago, given the numerous economic and geopolitical developments since then. As a reminder, the new US administration took office on January 20 and swiftly introduced tariffs on imports from Canada and Mexico in early February.

We now know that the imposition of the tariffs has since been postponed for a month, among other twists and turns. It appears that goods-producing companies have taken note, increasing production in the short term to get ahead of the tariffs. In particular, the mining sector recorded its best performance in over three years.

The service sectors posted weaker results overall, while retail trade recorded its most significant decline in over two years. In contrast, the transportation and warehousing sector posted the best performance among the service sectors, likely due to efforts to stay ahead of the tariff threat.

The GDP figures published this morning provide insight into the responsiveness of various Quebec business sectors to tariff threats. The sectors most at risk from tariffs are those that have intensified their activities.

January's solid performance enables Quebec to start the first quarter of 2025 with a carryover growth rate of 2.2%. This aligns with our forecasts, which will be updated tomorrow, and anticipate a vigorous first quarter. This is because our exporters have front-loaded their activities to get ahead of the tariffs. This front-loading effect, which subtracts from future exports, combined with the uncertainty already reflected in lower hiring and investment intentions, will make a recession in Quebec and Canada hard to avoid over the coming quarters.