FREDERICTON, NEW BRUNSWICK--(Marketwired - May 7, 2014) - Economic growth in New Brunswick is expected to improve by year end, 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.
Robert Kavcic, Senior Economist, BMO Capital Markets noted that real GDP is expected to grow at 1.3 per cent this year - up from 1.1 per cent in 2013 - followed by another boost in 2015 (1.7 per cent).
Both the manufacturing and resource sectors have challenges ahead, however production should begin to grow again by 2015, according to Mr. Kavcic. "A stronger U.S. economy and weaker Canadian dollar likely mean the worst is behind for the manufacturing sector. Exports should also get a boost, particularly in the forest products sector as the U.S. housing recovery continues to progress this year."
Forestry continues to play a critical role in the economic health of New Brunswick. "Overall, forestry remains crucial, providing highly coveted, above average earnings to non-urban workers," said Carolyn Booth, Senior Vice President, Atlantic Provinces Division, BMO Bank of Montreal. "New Brunswick's forestry industry being heavily dependent on lumber exports to the United States, the 2013 rebound in the U.S. housing market is providing a positive outlook to industry experts, who are forecasting continued double digit growth at least through 2016."
"Hydraulic fracturing for the extraction of shale gas has represents a significant potential economic opportunity for the province," added Allison Hakomaki, Regional Vice President, Commercial Banking, Atlantic Provinces Division, BMO Bank of Montreal.
According to a recent StatCan survey of public and private investment intentions, New Brunswick can expect to see a modest 2.1 per cent increase in 2014 which is a marked improvement from the double-digit declines seen in each of the prior two years. "Specifically, private sector capital spending is expected to expand 3.9 per cent on the back of machinery & equipment, which would mark the first year of growth since 2008," said Mr. Kavcic.
"A retrenchment in capital spending - in both the public and private sectors - was a key reason for soft growth performance in recent years," he said. "However, overall growth is expected to pick up in the latter part of this year and into 2015 as the level of capital spending is predicted to increase."
Ms. Hakomaki also noted that the port of Saint John is an economic bright spot as the container terminal is now a port of call to the second and sixth largest shipping lines in the world. Growth in volume through the port exceeded 50 per cent in 2013, with further growth expected for the remainder of 2014.
Ms. Hakomaki 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 financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had total assets of $593 billion and more than 45,500 employees at January 31, 2014.