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Economic News

Quebec: Economic Pullback in April Driven by Manufacturing Sector

July 29, 2025
Sonny Scarfone
Principal Economist

Highlights

  • Quebec’s real GDP contracted by 0.3% in April, a sharper decline than the national average External link. (-0.1%). This marks the second decrease in three months, pointing to a broader economic slowdown. Notably, the size of Quebec’s economy in April was slightly below its level from October 2024, underscoring the loss of momentum.
  • In line with the national trend, the decline in overall economic activity in Quebec was primarily driven by a contraction in the manufacturing sector. This sector was particularly affected by heightened trade tensions in April. Without the drag from manufacturing, real GDP in Quebec would have edged up by 0.1%.

Comments

Quebec’s economy has slowed considerably since the beginning of the year, with real GDP in April falling below its level from six months earlier. The decline was mainly concentrated in goods production, led by the manufacturing sector. This weakness is not surprising, as several American importers brought forward their activities in the first quarter to avoid the new tariffs then announced for April. This anticipation reduced subsequent supply needs, limiting purchases in April despite the postponement of the tariffs. The construction sector also recorded a decline, as did the utilities sector (mainly electricity production).

On the services side, notable gains were recorded in accommodation and food services, as well as in arts, entertainment and recreation. The latter posted its strongest growth in over three years, likely supported by the Habs’ playoff run, which helped boost activity. The federal election held in April also contributed positively, temporarily supporting growth in the public administration sector.


Implications

April was marked by a period of heightened uncertainty following “Liberation Day,” elevated volatility in financial markets, and the postponement of trade negotiations—initially scheduled for July and later pushed back to August 1. At the time of writing, discussions between Canada and the United States were still ongoing, with the aim of reaching an agreement by Friday’s deadline.

Regardless of the outcome of the negotiations, it is clear that Quebec’s economy began to lose momentum with the arrival of spring. According to our forecasts External link., this slowdown is expected to result in two consecutive quarters of very limited growth.

 

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