Quebec: economic activity declines in February

In February, the weakness of Quebec’s economy was broad-based, affecting most sectors, which either contracted or remained stagnant. All goods-producing industries posted declines, in sharp contrast to a particularly robust January, which had seen the strongest growth in goods production since August 2020.

To put things into perspective, recall that the first wave of tariff increases in Canada was initially deferred until early March. In this context, the decline in output across the manufacturing, wholesale, and transportation and warehousing sectors appears particularly ill-timed. One might have expected importers—particularly from the United States—to ramp up activity in anticipation of the new tariffs. Upcoming data releases will shed more light on whether such anticipatory behaviour materialized.

Several other service sectors also recorded notable declines, particularly retail trade, arts, entertainment and recreation, as well as accommodation and food services. The expiration of the GST holiday on a range of goods and services midway through the month may have contributed to the overall drop in activity. In contrast, sectors that performed well in February included the public sector and finance and insurance.

The weakness observed in Quebec’s economy in February—characterized by declines in goods-producing industries and several service segments—reflects an already fragile economic environment. While certain sectors have shown relative resilience, signs of a broader slowdown are becoming increasingly evident. The labour market External link., in particular, has remained stagnant for several months, reinforcing concerns about the province’s short-term economic momentum.

Since February, the situation regarding tariffs imposed by the U.S. administration has somewhat stabilised. However, earlier uncertainty has already weighed on key economic indicators— particularly consumer confidence, as well as business hiring and investment intentions. Although economic forecasts have been revised upward, the prospect of a mild recession in Quebec during the second and third quarters of 2025 remains a plausible scenario (see our most recent forecasts External link. for details).