BMO Financial Group
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BMO Financial Group

May 08, 2013 08:00 ET

BMO Blue Book: Alberta Growth Slowing but Still Among Canadian Leaders

- GDP growth of 2.5 per cent expected in 2013, 2.9 per cent in 2014; Canada GDP growth expected to be 1.6 per cent in 2013, 2.3 per cent in 2014

CALGARY, ALBERTA--(Marketwired - May 8, 2013) - After growing 3.9 per cent in 2012, Alberta's economy is expected to expand a more modest 2.5 per cent this year - still among the Canadian leaders - according to the BMO Blue Book released today by BMO Capital Markets Economics and BMO Commercial Banking. Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the expertise of BMO's economists with information on current business conditions provided to BMO's commercial bankers by local businesspeople.

"The main trigger for softer investment activity is the lower price received by Canadian producers of heavy oil relative to WTI," said Robert Kavcic, Senior Economist, BMO Capital Markets. The good news is that the discount has narrowed, partly due to seasonal demand for bitumen, completed refinery maintenance and more pipeline capacity linking Cushing and the Gulf Coast."

Mr. Kavcic added that despite the challenge, oil production in the province was still up a solid 16 per cent year-over-year in 2012 Q4, led by 21 per cent year-over-year growth in bitumen output.

Meanwhile, employment growth has cooled to just 1.7 per cent year-over-year in March, down from a 2.6 per cent pace for 2012. "The labour market, however, still remains tight with the jobless rate at 4.8 per cent - the second lowest in Canada - and average weekly earnings rising 6.1 per cent year-over-year in the first quarter of 2013," noted Mr. Kavcic.

Housing markets in Calgary and Edmonton have not succumbed to slowdowns as seen in Vancouver and Toronto, with sales up 3.4 per cent year-over-year and 6.3 per cent year-over-year, respectively, in the first quarter of 2013. "With in-migration strong, incomes rising and lower supply, Calgary's MLS Home Price Index was up 8 per cent year-over-year in March and within 6 per cent of 2007's record," stated Mr. Kavcic.

"The economy in Northwestern Alberta is being fuelled by expansion and growth in the oil and gas services sector and also the oil and gas construction industry," said Lynda Taylor, District Vice President, Commercial Banking, Northern Alberta and NWT, BMO Bank of Montreal. "In particular, construction companies in the Northwest are bidding on new work coming from major liquid gas players in the market. Meanwhile, the continuing population influx into Fort McMurray and the Northeast has created real demand for additional services and amenities."

"Of particular note are the prospects for Alberta's First Nations; Alberta is full of opportunities for First Nations with numerous Bands ready to enter into creative economic development opportunities," said Mike Darling, District Vice President, Commercial, Southern Alberta, BMO Bank of Montreal. "BMO has provided many innovative solutions to First Nations over the years, and we recently heard from one Band Administrator who said BMO's approach to on-reserve lending is helping them achieve their goals for their community."

Mr. Darling added that BMO is armed with a highly-skilled team of experts that can make lending decisions at the local level to help its commercial clients boost productivity, expand into new markets and make strategic investment decisions that will help propel growth and drive success.

The full BMO Blue Book can be downloaded at www.bmocm.com/economics.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at January 31, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.

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