BMO Financial Group

BMO Financial Group

February 16, 2012 06:00 ET

BMO Blue Book: Ontario Growth Softening; Cautious Optimism Among Businesses

TORONTO, ONTARIO--(Marketwire - Feb. 16, 2012) - The Ontario economy is expected to grow 1.9 per cent in 2012, as a result of sluggish U.S. demand and fiscal restraint by the provincial government, 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.

"A prolonged period of soft U.S. growth, along with a near-parity loonie, should weigh on manufacturing and exports, but strong momentum in U.S. auto sales is a positive recent development," said Robert Kavcic, Economist, BMO Capital Markets. "The housing market, however, remains firm thanks to extremely low interest rates, and condo construction continues at a robust pace."

"Customers who survived the recession are looking to consolidate the gains they have made over the past few years by reducing their operating expenses and using up surplus productive capacity before investing in new equipment," said Susan Brown, Senior Vice-President, BMO Bank of Montreal. "Those who are upgrading their operations, however, are investing only in those things that will give them significant competitive advantages and/or improvements in productivity. This renewed focus on productivity will only benefit these firms in the long run.

"Our clients do believe that the economy will slowly improve over the coming year, and this retrenchment will help ensure they are ready to take advantage when the time comes. But, for now, caution is the order of the day," concluded Ms. Brown.

Mike Bonner, Vice-President, Commercial Banking, Greater Toronto District, BMO Bank of Montreal, echoed Ms. Brown's comments on customers investing in their businesses: "In the year ahead, several customers are planning to control expenses, increase capabilities and position themselves to take advantage of low borrowing costs for the acquisition of key capital assets and expansion of facilities. Innovation and investment in human capital are atop of their business agenda as measures to boost their competitive advantage."

The full BMO Blue Book can be downloaded at

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