Tableau de bord, région métropolitaine de Montréal = Trend chart, Greater Montreal region, 1 décembre 2000, Anglais

[" LITAN REGION G R EATE QUARTERLY PUBLICATION OF STATISTICAL ANALYSIS OF THE BOARD OF TRADE OF METROPOLITAN MONTREAL PRODUCED IN PARTNERSHIP WITH CANADA ECONOMIC DEVELOPMENT VOLUME 3, NO 2, DECEMBER 2 000 JOB CREATION IN MONTREAL: THERE\u2019S LIGHT AT THE END OF THE TUNNEL The employment picture in Montreal is clouded.The brisk pace of job creation last year has given way to crippling job losses since January: down 64,500 by the end of October.In the wake of this downturn, the unemployment rate is climbing, the employment rate is dropping, and people have lost interest in job hunting.Yet something is wrong with this picture.The help wanted index is climbing, and a host of other factors point to more prosperous times ahead: Quebec\u2019s GDP is growing faster than expected, real estate is jumping, consumer confidence has not been eroded, and the external sector continues to benefit from a buoyant export market.It is still early days to sound the knell of economic growth.OTHER MORALE-BOOSTING FACTORS ¦\tHouses are selling better here than elsewhere ¦\tTourism is still full of surprises ¦\tThe Port of Montreal just missed second place ¦\tEmployment assistance payments are down ¦\tThe Conference Board predicts strong employment growth CAUSES FOR CONCERN ¦\tDemography burdened by westward migration ¦\tInvestment has leveled off for the past two years ¦\tRetail sales lackluster CED REPORT Should electronic commerce be a priority for Quebec SMB\u2019s?The answer is not as simple as you might think.1+1 Canada Economic\tDéveloppement Development\téconomique Canada Canada 2 North Belt Laval South Belt 55% of Quebec\u2019s GDP Corporate tax: 75% of Quebec\u2019s total contribution 1.7 million jobs Population: 3.3 million MAP of THE METROPOLITAN AREA ¦\tMontreal, Laval and North and South Belts ¦\t111 municipalities THE FOLLOWING STATISTICS cover the census metropolitan area (CMA).Where unavailable, the MUC territory or the City of Montreal were included.These are the latest statistics available at the time of printing Data collected with the help of ROYAL BANK FINANCIAL GROUP' Published and distributed free of charge by Leadership ÜkÿuiTtkd the Board of Trade of Metropolitan Montreal\u2019s monthly journal THE TREND CHART for Greater Montreal is open to the participation of any organization dedicated to the progress of the metropolitan region.Reproduction of this document, in whole or in part, is authorized with credit to the Board of Trade of Metropolitan Montreal.Publication director: Jean-Pierre Langlois, economist Telephone: (514) 871-4000, ext.4070 Fax: (514) 871-1255 E-mail: jplanglois@ccmm.qc.ca Available on the Board of Trade\u2019s Web site at: www.btmm.qc.ca/presse/tdb 3 TABLE OF CONTENTS 2.\tMAP OF THE METROPOLITAN 3.\tMAIN FEATURES 2 4 \u2022\tInterprovincial migration (population) 4 \u2022\tMetropolitan employment growth (employment)\t5 \u2022\tPublic administrations in major cities (employment)\t5 \u2022\tEmployment assistance (employment) 6 \u2022\tPublic and private capital spending (investments)\t7 4.MACROECONOMICS\t8 Employment \u2022\tUnemployment rate\t8 \u2022\tJob creation\t8 \u2022\tHelp wanted index\t9 \u2022\tWork stoppages\t10 \u2022\tEmployment projections (Conference Board of Canada)\t10 Prices \u2022\tConsumer price index\t11 \u2022\tCost of living index\t11 5.SECTORIAL ECONOMY\t12 Transportation \u2022\tAir traffic\t12 \u2022\tPort of Montreal\t13 \u2022\tPort activity\t13 Tourism \u2022\tGreater Montreal hotel occupancy rates 14 Real estate \u2022\tHousing starts\t14 \u2022\tResale market\t15 \u2022\tOffice vacancy rates\t16 Retail market \u2022\tSales\t16 Financial sector \u2022\tSmall-cap stocks\t17 \u2022\tMontreal Exchange - options market 18 6.CANADA ECONOMIC DEVELOPMENT REPORT\t19 Economic Development In the global marketplace, entrepreneurship as well as partnerships, innovation and exports are key to business success.Canada Economic Development is geared to making the wheel turn in the right direction.We stimulate the growth of the Quebec economy by encouraging a dynamic business climate.Our goal:To promote small business excellence.Going Farther, Faster Small Business Excellence \u2022 SMBs and E-business 19 Canada Economic Développement 1^1 Development\téconomique Canada Canada w tfc y Chambre de commerce jV /1 du Montréal métropolitain Board of Trade f of Metropolitan Montreal 5 Place Ville Marie, plaza level, suite 12500, Montreal, Québec H3B 4Y2 Telephone: (514) 871-4000 Fax: (514) 871-1255 E-mail: info@ccmm.qc.ca MAIN FEATURES INTERPROVINCIAL MIGRATION: MONTREAL IN THE RED Over the past five years, Montreal has suffered a migration loss of 64,791 people to the rest of Canada, including other Quebec regions.But thanks to the inflow of immigrants, the overall result is nevertheless positive, with a net migration gain of 35,898.In fact, Montreal is the only major Canadian city with a net migration barely sufficient to hold its own.In 1998-99, the last year for which statistics are available, Montreal\u2019s net rate per 1,000 inhabitants was 4.2%.That is much higher than 3 or 4 years ago, when the rate was just 1%, but lags far behind cities like Calgary (18.6%), Toronto (12.3%), Vancouver (10.8%), and Ottawa (11.4%).Fortunately, these cities are less attractive than they once were, or the gap would be even larger.With regard to the inflow of immigrants, Toronto has posted a net migration (number arriving minus number leaving) of 65,000 people for each of the past five years, whereas Montreal has posted a balance of just 7,000.It is therefore not surprising that Montreal\u2019s demographic development has been so anemic, although we must admit that its net influx has risen significantly since 1995-96.In truth, Montreal\u2019s balance of migration is positive only with regard to other Quebec centres: Quebec City, Sherbrooke, Chicoutimi-Jonquière, Trois-Rivières, and Hull.Elsewhere in Canada, only Sudbury and Regina send Montreal more citizens than they receive from it.Of course western cities are major beneficiaries of Montreal\u2019s \u201cgenerosity\u201d: Calgary, Edmonton, and Vancouver are big winners in this category.But Toronto absorbs more Montrealers than any other Canadian city: 37,971, for a balance of 24,449 over the past five years.It is among those 45 and older that Montreal\u2019s population has suffered the greatest inroads.Among the younger generation, the situation is reversed.And finally, the net migration is slightly negative between Montreal and the rest of the province; it is squarely in the red between Montreal and neighboring provinces; but it is largely positive when it comes to other countries.Urban migration %\tNet rate per 1,000 inhabitants Calgary Toronto Vancouver Ottawa Montreal Quebec Source: Statistics Canada 1998-1999 =»\t1995-1996 =J 1996-1997 =>\t 5 EMPLOYMENT GROWTH IN THE PAST 12 YEARS: CALGARY AND VANCOUVER IN THE LEAD In the past 12 years, Canada\u2019s employment profile has undergone profound changes, particularly in its major cities.Employment grew by 41.2% in Calgary and 38.8% in Vancouver but by just 16.7% in Toronto and 10.2% in Montreal.Further illustrating the lack of symmetry between the economies of the West and of Central Canada, the picture looks quite different if you look at 1993 (a recession year), when the figures were 12.8% for Montreal, 18.6% for Toronto, 15.6% for Vancouver, and 31% for Calgary.Even more interesting is the evolution of employment within Canadian industries.Overall, there was a higher percentage of people involved in service activities (as opposed to commodity production) in 1999 than in 1987.The ratio was 5 to 1.Some 25% of the work force in the more industrialized cities of Montreal and Toronto now work in the goods sector.This percentage drops to 21% in Calgary and 17% in Vancouver.But wherever you look, the trend has been toward increased service activities for several decades.Surprisingly, the number of Torontonians involved in the construction and manufacturing sectors has been slowly falling for the past 12 years.Montreal has lost many construction workers (-27%) but has seen an increase (+8%) in the manufacturing sector.Calgary and - to a somewhat lesser extent - Vancouver have registered significant gains in these two components of the secondary sector.In upcoming issues, we will delve more deeply into this aspect of the labour market and Canada\u2019s industrial structure, just as we will now do with public administrations.Growth of metropolitan employment # N# ^ ^ ^ Montreal Toronto Vancouver Calgary i Source: Statistics Canada PUBLIC ADMINISTRATIONS: LIMITED GROWTH IN 12 YEARS Since 1987, the number of public-sector employees has barely increased in Canada\u2019s four major cities.In Montreal and Vancouver, it has grown by 5 and 4% respectively, while in Toronto and Calgary, it is down by 1.7% and 4% respectively.Overall, it has grown by just 0.6% in Canada.Over the past twelve years, the numbers have fluctuated widely, especially in Montreal and Toronto, and the situation in these two cities reflects parallel developments in their respective provinces.Overall, the number of civil servants peaked there in 1993, after which it began to fall. 6 Numbers at the federal level mirrored those in the country\u2019s two largest provinces.The number of civil servants in Vancouver (or British Columbia) and Calgary, on the other hand, reached their highest levels in 1996 and 1997 respectively.Surprisingly, although its population is 30% smaller than Toronto\u2019s, Montreal has almost as many employees as does Ontario\u2019s capital city.These fluctuations reflect what is already known about workforce reductions in Canada\u2019s civil service.There is no doubt that the federal government first of all, followed by the provincial governments, instigated significant downsizing in public administrations beginning in 1993.Recently, however, the public sector has begun to hire once again.Its pockets lined with cash, the government appears to be feeling generous again.Public administrations in Canada 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Source: Statistics Canada Montreal hi\tVancouver ¦¦ Toronto ¦¦\tCalgary i ¦ i EMPLOYMENT ASSISTANCE: THE NUMBERS KEEP FALLING Since the high point reached in 1996, the number of employment assistance recipients has dropped steadily in Montreal and elsewhere in Quebec.In the last four years, this number has decreased by 24% in Greater Montreal - a positive business cycle indicator.Nevertheless, that number is still higher than it was eleven years ago, just before business conditions began to deteriorate in Quebec.Since that time, the number of recipients has grown by 22.4% in Greater Montreal and by 12% in the province as a whole.Of course Montreal\u2019s population has also grown (by some 5%), but there are proportionally more poor people now in Greater Montreal than there were then.Moreover, it is perhaps not surprising to note that the elasticity of demand for employment assistance is higher in the city of Montreal than elsewhere in Greater Montreal.Between 1989 and 1996 and between 1996 and 2000.the number of recipients fluctuated much more in the central city than elsewhere in the metropolis.The poor, who are largely concentrated in Montreal, have a much smaller safety net and are thus more sensitive to economic conditions than the rest of the population.Employment assistance recipients 800,000 700.000 600.000 500.000 400.000 300.000 200.000 Source: Ministère de la Solidarité sociale Greater Montreal i All of Quebec Greater Montreahlsland of Montreal, Laval, Montérégie, Lanaudière, Laurentians * Average for the first six months 7 INVESTMENTS: UP IN QUÉBEC, STABLE IN MONTRÉAL According to the latest figures released by the Institut de la Statistique du Québec (ISQ), investments in Greater Montreal have leveled off since 1998, while they have been rising steadily in Quebec since 1995.In short, if we compare fixed capital expenditures in Greater Montreal to those in the province as a whole, we see that this ratio rose from 50% in 1991 to 65% in 1998, when it began to fall to the current 60%.A strange state of affairs for a region that, for some time now, has been claiming to be enjoying an economic recovery! But a closer look reveals there is no cause for alarm.First of all, the most recent statistics are provisional and thus subject to change, sometimes major.Second of all, the ISQ data is regionalized using a somewhat limited methodology.It is difficult to know exactly where a large corporation is investing its money.($100 million invested by Bombardier, for example, could find its way to many different parts of Quebec.) And finally, a few very large investments may have unduly padded the figures for the rest of Quebec.This is the case for Alcan\u2019s aluminum plant in Alma and Magnola\u2019s magnesium plant in Estrie, two investments that have juggled up the share of these two regions disproportionately.Total investments Public and private sectors 40,000.000 35,000,000 30,000,000 25,000,000 15,000,000 10,000,000 5,000,000 # ^ ^ ^ N# ^ Greater Montreal\tQuebec Source: Institut de la statistique du Québec.Note: Greater Montreal includes the following administrative regions (Montréal, Laval, Montérégie, Lanaudière and Laurentides). 8 MACROECONOMICS EMPLOYMENT UNEMPLOYMENT: PARADISE LOST Since January\u2019s slack period, Montreal\u2019s employment situation has not yet regained the state of grace it had finally achieved after years spent moldering in purgatory.Going hand in hand with a negative employment growth rate, Montreal\u2019s unemployment rate has followed an upward trend since early this year.It would be natural to suppose that Montreal\u2019s rising unemployment rate was linked to its labour force participation rate.But surprisingly, the participation rate has been falling since last summer, indicating a slight drop in the number of Montrealers who are actually willing and able to work.Now, we know that periods of increased economic activity are usually accompanied by a higher labour force participation rate.Indeed this is exactly what we have been seeing in Toronto, Calgary, and especially Vancouver for the past few months.In October, Montreal\u2019s jobless rate rose to 8% after dipping to 7.6% in September, the lowest result since last April.While Toronto\u2019s rate inched up to 5.8%, it continues to follow the underlying downward trend begun in 1996.At 4.1%, Calgary\u2019s unemployment rate is just a stone\u2019s throw from the excellent U.S.performance of 3.9%.And although Vancouver\u2019s rate has been above 6% since last August, this is largely due to an increase in the labour force participation rate.Vancouver\u2019s employment rate is now almost 63%, its best result since April 1995.Unemployment rate Seasonally adjusted data Oct.-95\tOct.-96\tOct.-97\t0ct.-98\tOct.-99 Oct.-OO Source: Statistics Canada Montreal l Toronto I Calgary Vancouver I JOB CREATION IN QUEBEC: ALL IS NOT WELL The employment level in Montreal has dropped steadily since the beginning of this year.The figures for October confirm (as if confirmation were still needed) that job creation continues its downward trend.Since the high posted last December, Montreal has lost 64,500 jobs and Quebec as a whole showed a gain of just 2,700 jobs in ten months.Could we be in a recession?There is no reason to think so, although warning lights are popping on here and there, causing us to be cautious regarding the strength of the economy.For example, the 9 U.S.labour market is beginning to show signs of weakness, although its unemployment rate was a cheeky 3.9% in October for the second month in a row.In October, the employment level in Montreal was 1.8% lower than the previous month.There was a significant drop in the manufacturing sector (3.3% or 10,000 jobs), unlike in Canada, where employment jumped by 23,000.Although the service sector also lost 10,000 jobs in one month, it nevertheless gained 43,000 jobs overall in the past year.Commerce, transportation, and storage were among the services that saw an increase in employment.Elsewhere in the country, Toronto lost 6,200 jobs in October, while Vancouver maintained its upward climb (+4,400 jobs) and Calgary continued to surf its wave of prosperity (+6,200 jobs).In Canada, despite a slight weakness in the labour market observed early last summer, employment was up by 344,000 over October 1999.JOB OFFERS: CLEAR SKIES AHEAD If the help wanted index is a leading indicator, there is every reason to be of good cheer - despite the somewhat depressing news that has marred Montreal\u2019s job market landscape since early this year.The help wanted index took off last July and is still climbing: a good omen, perhaps, for the actual employment figures in the coming months.It is as though Montreal took a breather during the first quarter of this year to recover from the upward pressure exerted in late 1999 (other job market indicators appear to be still taking a prolonged coffee break).The picture is equally rosy for the province of Quebec (up 2.3% in October) as well as for Vancouver (up 5%), and Toronto (up 1.6%).And the good news is echoed throughout Canada which, as a whole, is up 2.3% since September and 8.5% over the last year.Despite a few rough spots in the economic landscape -job creation, unemployment, retail sales, oil prices, and stock exchange fluctuations- there is good reason to be optimistic.The sky is perhaps not about to fall on Montrealers - at least any time soon.Job creation annual variation Deseasonalized data 0ct.-96\tOct.-97\tOct.-98\t0ct.-99 Oct.-OO Montreal ¦¦¦ Help wanted index Smoothed, seasonally adjusted data 1996 = 100 ¦ 190 !: Statistics Canada Montreal Toronto Calgary Vancouver Oct.-95 0ct.-96 Oct.-97 0ct.-98 Oct.-99 Oct.-OO 10 STRIKES AND LOCK-OUTS: CALM DAYS ARE HERE AGAIN After the ups and downs of the past two years, everything seems to indicate that the work stoppage situation in Quebec and Montreal will resemble the one between 1993 and 1997 when Montreal posted an average of 55,000 lost person-days and 350,000 for the province overall.In contrast, Toronto appears poised for a particularly active year in this area.Indeed, the Queen City reported more lost person-days in the first six months of the year than for the period a year earlier, which was still quite substantial.As for Vancouver, were it not for its first quarter, which saw more strikes and lockouts than usual, the city would have had plenty to crow about since not a single work stoppage was recorded in the second quarter.In this quarter, only Société de la Place des Arts de Montréal and Mométal de Longueuil experienced costly stoppages.Ontario, in contrast, did not fair nearly as well: Balmerton\u2019s Goldcorp, Cambridge\u2019s Hostess Frito-Lay, Toronto\u2019s Bombardier De Havilland, Toromont and Toronto City Corp., and Mississauga\u2019s Atomic Energy of Canada set themselves apart in this regard.In British Columbia, only Forest Industrial Relations and Cineplex Odeon/Famous Players posted more lost person-days than the provincial average.Work Stoppages Companies - all categories 500,000 400,000 300,000 200,000 100,000 Montreal Toronto Vancouver Source: Human Ressources Development Canada Note*: first half on an annual basis EMPLOYMENT PROJECTIONS -MONTREAL SOMETIMES LEADS THE PACK If the Conference Board of Canada is to be believed, employment growth in Montreal will meet great expectations in the coming years - particularly in 2002, when Montreal should be head and shoulders above other major Canadian cities, as illustrated by our graph.\u201cMontreal\u2019s growth cycle lagged behind those of Toronto and Ottawa,\u201d remarks Louis Thériault, head of urban forecasting at the Conference Board (an independent Ottawa-based institution).\u201cIt\u2019s not surprising that Montreal\u2019s growth rate exceeds those of other cities, since it got off to such a slow start.\u201d It is no less surprising that Montreal\u2019s high-tech sectors will play a key role in this growth spurt.The productivity gains expected in these sectors, in which Montreal excels, will inevitably have a spillover impact on Montreal\u2019s entire economy.Forecasted employment growth 2000\t2001\t2002\t2003\t2004 Source: Conference Board of Canada Montreal ¦¦\tVancouver h Toronto ¦¦\tCalgary m 11 PRICE INFLATION: GAS PRICE HIKES TAKE THEIR TOLL It will come as no surprise to Montreal drivers: rising costs at the gas pumps have indeed had an impact on inflation.In September, inflation rose by 2.5%, largely in response to the energy sub-index, which grew by 12.7% in one year.This is still better than Canada as a whole, however, where this sub-index shot up 15.1% last month, driving the overall index up 2.7%.In Quebec, on the other hand, the price of oil increased by 57.4% in September, leading us to conclude that the price of natural gas and gasoline must have risen more slowly than elsewhere in the country.This September, tuition costs in Canada saw their smallest increase since 1978, although some provinces continue to do better than others in this area.Quebec and British Columbia, for example, increased tuition charges by just 0.3%.And housing, the only index component where Montreal differs from Quebec, grew slightly faster in the province than in its metropolis.Although energy costs are troubling, inflation is not really a major concern right now.When you leave energy out of the picture, the overall index last month was the lowest it has been in five months, and there is a good chance that inflation will not worsen in the coming months - on the condition, of course, that the situation in the Middle - East does not again cloud our crystal ball.MONTREAL NEARLY UNBEATABLE WHEN IT COMES TO PRICE On average, and regardless of the pollster, Montreal always tops the list when it comes to getting more \u201cbang for your buck.\u201d In the latest poll, conducted by the Union des Banques Suisses (UBS), Montreal ranked very favourably against major U.S.and European cities, one of the select few that emerged unscathed when rent was factored into the equation.In contrast, Tokyo, New York, London, Paris and Cairo lost points when rent was taken into consideration in the basket of goods and services used to calculate the cost of living.Since UBS conducted its last cost-of-living survey in 1997, the relative ranking of cities has shifted, and not because of the currency rate but rather, due to inflation.As such, Tokyo, London and major North American cities are Inflation Consumer price index Sept.-96 Sept.-97 Sept.-98 Sept.-99 Sept.-00 Sept.-95 Source: Statistics Canada Toronto Vancouver Montreal I Cost of living index (2000) Price of a basket of goods and services m / * * / 7 * / / s?/ / 7 Source: Union des Banques Suisses Without rent With rent sssa 52 12 relatively more expensive today than three years ago, while the price of a basket of goods and services has dropped in Europe.Surprisingly, the 58-city UBS survey revealed that Montrealers not only earn higher net and gross salaries than Torontonians but also enjoy greater purchasing power than their immediate neighbours to the west.It also comes as no surprise that Asians and North Americans spend more time working than Europeans.Residents in Santiago, Chile, work the most hours, earning only 17 vacation days per year against 31.3 in Madrid, 31.2 in Berlin and 28.3 in Paris.Montrealers get 19 days of R&R, while at 11.7, Toronto has one of the lowest figures in the world.¦ SECTORIAL ECONOMY TRANSPORTATION TRAFFIC UP SLIGHTLY AT MONTREAL AIRPORTS Passenger traffic at Montreal airports is up just 3% since the beginning of the year (January to September), compared to 6% for the same period last year, a decline due partly to the merger of the country\u2019s two major airlines and to the bankruptcy of Air Alliance.On the other hand, crossborder traffic at Dorval airport has increased substantially.This progress bodes well for high-tech sectors because the performance of what is commonly referred to as the new economy is reflected here by greater air traffic between Montreal and the United States.Mirabel continues to grow, although the first three quarters of this year were down slightly from 1999 (9% compared to 10.3%).Chartered flights between France and Montreal continue to bolster the performance of this airport.We know that the percentage of international passengers is higher at Mirabel than at Dorval, and that their percentage is higher at Montreal airports than at either Toronto or Vancouver.Total passengers in Montreal airports annual growth rates six month moving average Source: Aéroports de Montréal 13 THE PORT OF MONTREAL: A HAIR\u2019S BREADTH OF VANCOUVER When it comes to container shipping, Montreal certainly carries its weight in North America: in 1999 it ranked 12th, a hair\u2019s breadth of Vancouver, which placed 11th.As for Vancouver, it looks like it\u2019s pulling out all the stops, increasing its volume by 27% against our city\u2019s 6.5%.On a global scale, Canadian ports are very small indeed.Despite its excellent performance last year, the port of Vancouver ranked 46th in the world\u2014Montreal\u2019s position in 1998.With the exception of Rotterdam (Netherlands), the world\u2019s five largest container ports are found in Asia.As for North America, Long Beach on the American West Coast, Los Angeles and New York ranked, respectively, 6th, 8th and 13 th.The Port of Montreal is very important when viewed as an inland port.As such, it is the leading North American port serving the American Midwest.It is also a specialized port, with traffic heading primarily to Europe and the Mediterranean region.For its part, Toronto has a seasonal port, largely a tributary of the St.Lawrence Seaway and land-locked by winter ice.Main ports in the world, 1999 III! / / / / / / / / / / / / ?/ ?/ / A « #\t/ j?/\t/ J ** «j ,e> ^ -y * / Source: UNCTAD, Review of Maritime Transport, Port of Montreal / PORT TRAFFIC: MONTREAL MISSES SECOND PLACE BY A HAIR In 1999, the Port of Montreal came within a hairsbreadth of vaulting into second place among Canadian ports based on tonnage of freight handled.Sept-Iles/Pointe Noire suffered major freight losses (-14.3%) between 1998 and 1999, but the two Quebec ports were still separated by a hefty million tonnes.Montreal\u2019s freight losses (-3.1% between 1998 and 1999) were due to a reduction in oil deliveries, whereas Sept-Ile/Pointe-Noire\u2019s decline was caused by a major reduction in iron ore exports.Although Vancouver still tops the list of major Canadian ports, it nevertheless lost 1.2% of its freight since 1998.Both types of marine traffic (domestic and international) were down in Vancouver, which handles one-fifth of the country\u2019s traffic.Coal exports dropped significantly in 1999, and Vancouver, which handles 80% of deliveries, was hit hard by this loss.Overall, Canadian ports handled a record tonnage of cargo last year, thanks primarily to a strong increase in domestic shipments.International exports were down, however, with the demand from Europe and Asia somewhat lower.Canadian port traffic in 1999 Variations in % 1998-1999 Total domestic and international 70,000 60,000 40,000 30,000 20,000 Source: Statistics Canada 14 TOURISM TOURISM: 2000 SHOULD BE AN EXCELLENT YEAR In terms of hotel room occupancy rates alone, 2000 shows every sign of being a banner year for Greater Montreal.Rates from January to September were higher than for the same period last year.What\u2019s more, most indicators point to the same conclusion.Not surprisingly, room rates have risen significantly in the past year.According to Pannell Kerr Forster\u2019s 2000/2001 Outlook, Montreal has posted the sharpest increase in average earnings per available hotel room.Between 1999 and 2000, earnings here rose from $82 to $91 ; in Vancouver they fell from $82 to $78; and in Toronto, they increased from $90 to $94.Three factors have contributed to this excellent showing: very few rooms have been added to the accommodation plant in recent months; Montreal\u2019s economy is doing well; and this city has spent more on tourism promotion than has either Toronto or Vancouver.While 2001may be difficult in terms of conventions, the overall results should be better than this year\u2019s - an optimistic forecast justified by Montreal\u2019s popularity as a pleasure tourism destination.Recent increases in Greater Montreal hotel prices are nevertheless pushing customers towards the outskirts of the city.Tourists, and even convention delegates, are moving to the suburbs or even to Quebec City.Greater Montreal hotel occupancy rates Seasonally adjusted 1989 1990 1991 1992 1993\t1994\t1995\t1996\t1997 1998 1999 2000 Six month moving average 90 85 80 75 70 65 60 55 50 45 Source: Hotel Association of Greater Montreal * Seasonally adjusted by the Board of Trade of Metropolitan Montreal.REAL ESTATE HOUSING STARTS: NO LONGER FLYING HIGH After an excellent showing in August and September -and even July - housing starts in Montreal have returned to more normal levels.At 13,000 units on a year-over-year basis, October\u2019s figure corresponds to the amount forecast by the CHMC for the whole of 2000: not a bad performance when you compare it to last year (12,366 units).Better yet, up to October, the year 2000 had posted a 4% gain, making this the best result in the metropolitan area since 1994.Units Housing starts Seasonally adjusted data 60,000 50.000 40.000 30.000 20.000 10,000 > 60,000 50.000 40.000 30.000 20.000 10,000 0 Montreal Toronto Vancouver Source: CMHC 15 In the last few months, there has been a slight slowdown in the single-family dwelling sector.On the other hand, construction projects for the rental market have been on a roll since January.Old-age homes are making a particularly good showing, especially on the North Shore.And condos continued their bold advance in October (+37%), giving every indication that 2000 will be one of the best years in more than a decade.Overall, housing starts in Canada came back strong after the slowdown last June.Vancouver, in particular, jumped 75% in the last month, another sign pointing to a recovery in British Columbia.As for Toronto, it seems to be in a class of its own, with results far exceeding 40,000 units.RESALES: MONTREAL BREAKS THE MOLD Following the anticipated 4.5% increase in Montreal housing transactions in 2000, the CMHC expects a 4% decline in this area next year -unlike the other major centers that we monitor.It seems that, after the strong growth chalked up in recent years, Montreal cannot keep up the pace it has set since 1997.Sales increased by 18.4% in Montreal, while they decreased in Toronto, Vancouver, and Calgary.This year, the CMHC revised downward its figures for single-family dwellings, but it remains optimistic about the very popular condo sector as well as multiplex units - the only bargains in today\u2019s market.Next year, it is expected that both the single-family and condo markets will decline.For the first time in eons, supply in the Toronto market is drying up.This is bad news to buyers, who must pay some $245,000 for a house.That is still less than Vancouver, however, where the average price is $370,000.Surprisingly, it is in the higher price range ($500,000 and up) that the Vancouver market is most active.Yet despite the excellent labour market and the very respectable recovery of consumer spending, its resale market continued to crumble this year.And although Calgary\u2019s economy is still booming, we expect a 2.5% decline in resales caused by a decrease in inter-provincial migration (things are going too well elsewhere) and a more restricted supply.Resale market Annual variation rates 75.000 65.000 55.000 45.000 35.000 25.000 15.000 5,000 -5,000 Montreal\tToronto Vancouver Calgary Source and forecasts: CMHC 16 COMMERCIAL REAL ESTATE: IT JUST KEEPS GETTING BETTER AND BETTER At the risk of repeating ourselves, we must point out that current office vacancy rates in Montreal are the lowest they\u2019ve been in more than ten years.You have to go back to 1988 to find similar results.As they say in real estate circles, the absorption levels have been exceptional over the past year: 2.3 million square feet have changed hands, thanks primarily to sustained growth in the multimedia and telecommunications sectors in general.In addition, exciting new projects have been announced, such as E-commerce Place, which hopes to attract the major players in the industry.Others, such as the head office of the Caisse de dépôt et de placement du Québec, to be located in Square Victoria, and the former Eaton store should increase the supply of commercial space in downtown Montreal.The rest of the country is not complaining either.This year, all of Canada will be celebrating the tenth anniversary of the rising real estate market.Montreal\u2019s vacancy rate was 10.2% in the third quarter, but it was just 6.9% in Canada.And Toronto and Vancouver enjoyed rates of just 5.8% and 4.5% respectively! Still, downtown Montreal can still boast very attractive class A office occupancy costs compared to those in Toronto and Vancouver: $28 per square foot compared to $43 in Toronto and $36 in Vancouver.A bargain! Office space vacancy rates Source: Royal LePage Montreal am Toronto ¦¦¦ Vancouver mi RETAIL MARKET RETAIL SALES: IN MEDIO STAT VIRTUS If, as the Romans claimed, virtue is in the middle, Montreal is extremely virtuous.In fact, since August 1999, its annual variation for retail sales has hovered within the narrow 5% band - sometimes at the midpoint between that of Toronto and Vancouver: quite the reverse, in fact, of both Ontario, whose retail sales have been falling since they peaked in August 1999, and British Columbia, which has shown strong growth since the winter of 1999.Apparently, Montreal\u2019s jump to 8.6% last July was simply the result of summer madness.This data should be added to other factors pointing to the fact that economic growth is not what it was or, at best, is marking time.Although August sales were respectable (+5.7% across Canada), they were largely stimulated by Retails sales Seasonally adjusted Aug.-96 Aug.-97\tAug.-98\tAug.-99\tAug.-00 Source: Statistics Canada Montreal Ontario B.-C.25 20 15 10 5 0 -5 -10 17 dealers of automobiles and recreation vehicles.If it wasn\u2019t for discounts and other sales incentives, retail sales would have fallen by 0.5% in monthly variation - the largest drop in a year and a half.After posting strong retail sales in June and July, Quebec saw a 0.6% decrease last August.Only the automobile industry escaped this general slump.In Montreal, the monthly drop was 2.5%, another thrashing comparable to that seen last April (-3.1%).In the coming months, it is probable that the slowdown in job creation and recent interest rate hikes will affect retail sales.FINANCIAL SECTOR THE NBF QUEBEC INDEX TOSSED BY THE STORM The current was clearly much too strong: in October, the NBF Quebec index was dragged down along with the TSE 300.Still, during the last quarter (August to October) the drop in the Quebec index was only a fraction that of Toronto\u2019s (-1.3% compared to -7.1%).This difference is understandable.After racing full steam ahead since summer 1998, the TSE 300 suffered a little sea sickness in the last two months: between the end of August and the end of October, its total yield fell 14.2%.Of course the telecommunications sector - particularly Nortel - was behind this shakeout.NBF Quebec, on the other hand, suffered smaller losses simply because its big guns are less heavily weighted.Groupe Jean Coutu, its largest player, represents just 6.17% of the index.Nortel, on the other hand, accounted for some 35% of the TSE before it ran aground.\u201cUnder these conditions, it is not surprising that our index fared better during the last quarter,\u201d observes Martin Goulet, financial analyst at the National Bank Financial.Since the start of this year, Roctest, Memotec Communications, and Labopharm have been the index\u2019s big winners, while Hartco Enterprises, Telescene Film Group, and Saco Smartvision have continued their descent into the nether regions.Small-cap stock index Source: National Bank Financial Russell 2000 NBF Quebec B TSE200 450 400 350 300 250 200 150 100 18 OPTIONS TRADING BRISK AT THE MONTREAL EXCHANGE As expected, the volume of options traded on the Montreal Exchange continued to rise in the third quarter.In fact trading in July and August was up 287% over the same period last year.On the futures market, on the other hand, BAX (three-month Canadian Bankers\u2019 Acceptance Futures contracts) were down significantly from last year.And 1999 figures were already lower than those for 1998.With the implementation of the restructuring program by Canadian exchanges at the end of last year, Montreal has seen the number of companies listed on its exchange decline dramatically, falling from 579 at the end of 1998 to 129 at the end of 1999.Under the terms of the agreement to specialize each Canadian exchange in a single market sector, Montreal turned over many of its companies to the Toronto Stock Exchange and the Canadian Venture Exchange in return for the exclusive right to list all exchange-traded derivative products.As a result, there were very few initial public offerings (IPOs) - just 14 compared to 24 in 1998 - and the number of new company listings was very low (just 20).Growth of Montreal Exchange option trading* 1995\t1996\t1997\t1998\t1999 Jan200s0Bp,\u2022 Source: Montreal Exchange * Excluding LEAPS, long-term options, a registered trademark of the Chicago Board Options Exchange.Last year, equity trading in Montreal took a nosedive, with the value, volume, and number of transactions all plummeting.Now, the Montreal Exchange aims to become one of the ten largest exchanges for derivative products in the world. 19 CANADA ECONOMIC DEVELOPMENT REPORT ELECTRONIC BUSINESS: A PRIORITY FOR SMES?BACKGROUND When discussing electronic commerce (B2B-Business to Business or B2C-Business to consumer), business networks or the integrated management of business processes, experts tend to use words like growth, explosion and revolution.More commonly known as electronic business, this term refers to procedures and activities that revolve around the usage of new information and communications technologies (NICT).When the transaction is commercial in nature, the term e-commerce is used.B2B refers to electronic exchanges between businesses and B2C describes those between businesses and consumers.In their simplest form, these electronic exchanges may be carried out totally by electronic mail.However, a more advanced use of NICT enables an enterprise to develop richer business relationships and thus expand its access to new strategic resources (funding, expertise, partnerships, etc)\u2014in short, to carry out electronic business.Contrary to what one might think, the Internet revolution is, first and foremost, transforming the way enterprises do business among themselves, much more than it is changing dealings between businesses and consumers.In Canada, B2B accounts for 87% of e-commerce activities, compared to only 13% for B2C (BCG, January 2000).In many cases, these new online relationships require an enterprise to reengineer its internal structure.In fact, its entire business strategy has to be revised to include electronic business.TRENDS AND ISSUES Surveys have confirmed that the rate at which e-busi-ness, especially Web presence, is making inroads into Quebec enterprises varies in accordance with the size of the enterprise, its sector of activity and its geographic location.There are a number of reasons why Quebec SMEs hesitate to make the transition to e-business.Of the 42% of firms connected to the Internet but without an Internet site of their own, almost 70% indicate that they have decided not to establish a Web site because they have other priorities and % 70 60 50 40 30 20 10 0 Web presence of Quebec enterprises by size (number of employees) 61% 10 to 24\t25 to 49\t50 to 99\t100 or more employees employees employees employees Source: Poussart, Brigitte and Lacroix, Éric, Le Commerce électronique, Infomètre Collection, Enquête sur l'appropriation des TIC au Québec, CEFRI0, April 2000.Web presence of Internet-connected Quebec enterprises by sector Primary Construction Manufacturing (low knowledge) Manufacturing (average knowledge) Manufacturing (high knowledge) Wholesale trade Retail trade Transportation and warehousing Information and culture industries Finance and insurance Professional, scientific and technical services Corporate management, adm services Other tertiary sectors 20\t40\t60\t80\t100 % Source: Poussart, Brigitte and Lacroix, Éric, Le Commerce électronique, Infomètre Collection, Enquête sur l'appropriation des TIC au Québec, CEFRIO, April 2000. 20 lack the time, while 60% feel that such a move would not be very useful for the development of their business.Issues crucial for SMEs are inherent in the transition to e-commerce:\tbetter relationships with partners, lower costs, increased profits, client loyalty, risk management, etc.In a Canada Economic Development study of the management of information technology and electronic business in SMEs, meetings with owner-managers led to the identification of some obstacles to the adoption of electronic business practices: ¦\tlow level of familiarity with trends and technologies in their sector ¦\tuncertainty as to the potential benefits ¦\tconcerns with regard to the additional human resources and skills required ¦\tcost and investment required ¦\tsecurity of information Reasons for not being on the Web 10\t20\t30\t40\t50\t60\t70 % Lack of time/ other priorities Seen as of little use to company Lack of internal Costs too high Concerns about security !% expertise OUTLOOK According to enterprises, e-commerce is neither a technology nor an end in itself, but an innovative business practice, the penetration of which cannot be evaluated in the same way as that of generic technology.As a business practice, e-commerce must be placed in a specific context, particularly in terms of industrial sector and the size and purpose of the enterprise.The striking regional disparities observed provide a very clear indication of this.But, over and above the specific contextual details, what would be the determining factors in causing an enterprise to turn to e-commerce?We are convinced that the adoption of e-commerce is inextricably linked to market signals and the ability of enterprises to manage the resulting risks.In an environment characterized by complexity and increased competitiveness, data confirm that the signals are, at present, relatively weak in a number of sectors.In addition, insofar as c-commerce is an innovative business practice, adopting it calls for an in-depth examination of an SME\u2019s business processes and internal structure, a review that goes well beyond a simple technological upgrade.Source: Poussait, Brigitte and Lacroix, Éric, Le Commerce électronique, Intomètre Collection, Enquête sur l'appropriation des TIC au Québec, CEFRI0, April 2000.Web presence rate by region (summers of 1999 and 2000) % CMAs Quebec as Montreal Quebec City Other a whole CMA CMA Quebec Rest of Quebec | Summer 1999\tSummer 2000 In general, the more intangible and novel an innovation project, the higher the degree of uncertainty and risk.Our analysis of the adoption of e-commerce practices must, therefore, be carried out on the basis of a reading of the risk management capabilities of enterprises, an area where SMEs clearly lag behind.Source: Poussart, Brigitte and Lacroix, Éric, Le Commerce électronique, Infomètre Collection, Enquête sur l'appropriation des TIC au Québec, CEFRIO, April 2000.By Stéphane Pronovost, Economist These two aspects remind us that, in the end, e-commerce is a business strategy that fits into a larger context of organizational change, the rate and nature of which are specific to the entrepreneurial context.With the assistance of: Marie-Claude Cadorette, Communications Advisor Annie Trudeau, Analyst Natnaël Merid, Economics Trainee Canada Economic Development 3 "]