Montreal: Canada’s new job-creation capital

After years of languishing on the employment front, Montreal is finding itself suddenly, and with little fanfare, in the midst of a job boom.

Long a leader in the unemployment rankings compared to other major Canadian metropolises (“Champion of Unemployment” boomed one headline last spring when the city’s jobless rate hit 11 per cent), the tide turned suddenly last year. Between December 2015 and December 2016, the number of people employed on the island of Montreal increased by 70,000, Statistics Canada reported, with the vast majority of them — 57,000 — working full-time. The city’s unemployment rate dropped from 10.3 per cent to 7.3 per cent over that interval, the lowest tally seen since 1987, when Stats Canada started recording such figures. A record 1.03 million people were employed in Montreal in December, the city’s economic development department reported.

A stronger U.S. economy and weak Canadian dollar that spurred manufacturing and tourism are among the chief causes, along with numerous public sector construction projects and more stable provincial financial outlook now that Quebec is reporting surpluses, as opposed to deficits.

Projections are good for the near future, with one possible caveat: newly elected U.S. President Donald Trump, whose protectionist policies could hurt exports, if implemented, experts say.

Montreal’s spike in jobs mirrors Quebec’s, which saw a net 84,500 full-time jobs created over the same period last year, more than Canada’s nine other provinces combined. (In fact, the island of Montreal alone saw a larger increase in the number of people employed than all the other provinces combined). Overall, Canada saw a 1.2-per-cent increase in employment last year. Montreal’s increase was 7.3 per cent.

Of the more than 90,000 full- and part-time jobs added in the province, nearly 80 per cent were in the Montreal area.

However, this oasis of positive economic news has gone relatively unheralded in a city that has seen unemployment figures soar as high as 15 per cent in 1992 and 1993.

“Quebec is on fire! ( but no one is talking about it)” read the headline on a column last week by the late Benoît Aubin, a respected journalist at the Journal de Montréal and former Gazette reporter who died on Wednesday, four days after the column was published.

Part of the reason, said Richard G. Shearmur, a professor in McGill’s urban studies department and expert in employment growth, is that the hike is due to a large number “of important but small elements that are all going in the same direction,” none of which stood out on their own, but, taken together, combined for record growth.

Primary among them is the lower Canadian dollar, which has spurred exports, particularly to the United States.

“Although manufacturing has gone down quite a bit in Montreal, quite a lot still happens here, and there are a lot of services, like engineering, for example, and transport, that are linked to manufacturing,” Shearmur said.

The largest increases were seen in the manufacturing industry, which added 24,000 jobs, and retail and wholesale trade, which had 23,000 more people working, Statistics Canada analyst Andrew Fields noted. Despite numerous continuing major public works construction projects in the city, including the rebuilding of the Champlain Bridge and the Turcot Interchange, the construction industry saw the largest decline, with 8,400 jobs lost, possibly because of a flat residential housing market.

The lower dollar has also spurred more tourism by attracting people seeking a cheaper vacation in an attractive, affordable venue, Shearmur said.

The city is benefiting from migration from the regions, as younger people seeking education or other opportunities flock to the city, officials with Montreal’s economic development department said.

Tourist visits to the city hit an alltime high in August, particularly among people in their 20s drawn to the city’s numerous outdoor festivals. The city is projecting Montreal’s population will continue to grow for at least the next five years.

In addition, the Liberal government’s stabilization of the province’s finances after years of belt-tightening, with a $2.2-billion surplus announced last fall, means Quebec is starting to spend again, which is taken as a good sign by investors.

Montreal is also aided by its relatively affordable housing and low cost of living, which means even though wages are low relative to other cities, its affordable quality of life still make it an attractive draw for qualified professionals, Shearmur said. Its low profile internationally has also spared it from the foreign investors who helped inflate housing costs in cities like Toronto and Vancouver, where the December benchmark home prices were $720,000 and $897,000, respectively. In Montreal, it was $312,000.

“Montreal’s finance and technologies sectors are also creating jobs, as well as personal services that come with accommodation, arts, culture and entertainment,” said Henry Diaz, an economist with the Conference Board of Canada research organization. Celebrations and advertising surrounding Montreal’s 375th anniversary this year are also having an effect, he added.

“In the short and medium term, we expect growth to stay the same,” Diaz said.

The growth in knowledge economy jobs is particularly heartening, given the national push for a multifaceted workforce more resistant to market downturns caused by crashes in industries dependent on manufacturing or natural resources. In a Bloomberg News report this month (There’s a Surprise Leader in Canada’s Race for Smart Global Jobs), the authors note Quebec and Montreal have been targeting high-tech firms like France’s Ubisoft Entertainment with tax incentives since the 1990s. Today, Ubisoft employs 3,400 in Montreal and Quebec City and intends to add 120 positions a year over the next few years.

Montreal’s economic development department said the growth of jobs of late has gravitated beyond traditional sectors to innovative startups in areas like “smart” clothing or artificial intelligence. Financial technology services have also seen a rapid rise.

“It’s only the beginning, because several projects, like the REM light rail line, will invigorate our economy,” Mayor Denis Coderre told the Montreal Gazette. “Be it the tourism industry with its record number of tourists announced in 2016, or the cultural industry that puts Montreal in the spotlight around the world, Montreal has become once again a major hub in North America.”

All analysts interviewed said the good news is expected to continue, at least in the short term. That could all change, however, if Trump decides to follow through on his protectionist rhetoric.

“If tariffs go up and exports are more difficult, it could have important repercussions, not just for Montreal, but places like Toronto, too,” Shearmur said. “I think everyone is holding their breath to see which way things are going to go.”