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BMO Bank of Montreal

December 07, 2011 09:43 ET

BMO Economics: Manitoba Economy to Rebound in 2012

- Diverse economy and healthy labour market to support growth

- Manufacturing performing well with shipments up

- Real GDP growth of 2.0 per cent in 2011; 2.3 per cent in 2012 (Canada's at 2.3 per cent in 2011; 2.0 per cent in 2012)

WINNIPEG, MANITOBA--(Marketwire - Dec. 7, 2011) - After a year when wet weather adversely affected crops, Manitoba's growth is expected to rebound in 2012, according to the Provincial Monitor report released today by BMO Economics.

"Manitoba's diverse economy is expected to grow 2.0 per cent in 2011, held back by another poor crop year," said Robert Kavcic, Economist, BMO Capital Markets. "But growth should rebound to 2.3 per cent in 2012, outpacing the national average."

Manufacturing continues to perform well with shipments up 7.2 per cent year-over-year through September, led by firm growth in machinery and transportation equipment. Meantime, energy and mining activity should maintain their momentum given that commodity prices, especially oil, have held up relatively well. "Energy exports were running at more than twice year-ago levels through September," noted Mr. Kavcic.

Job growth, however, has been sluggish overall this year with employment up just 0.7 per cent year-over-year through November. This largely reflects a decline in public-sector employment (down 1.5 per cent since the end of 2010) as the Province restrains spending. Private-sector job growth, however, is still firm, with construction seeing especially strong growth this year. "Manitoba's jobless rate was the second lowest in Canada in November, at just 5.5 per cent," stated Mr. Kavcic.

A diverse economy and healthy labour market, combined with the Provincial Nominee Program, continue to attract international migrants. "Net international migration was a record 13,600 people in the latest four quarters (through the second quarter of 2011), which has helped hold population growth steady at 1.3 per cent year-over-year - a pace not matched since the early 1980s," said Mr. Kavcic. "With this trend likely to continue, retail sales and housing should continue to see support."

In the agricultural sector, this year's Assiniboine River flooding had a negative impact, with crop production expected to be well below year-ago levels.

"While many of our agri-business partners have experienced a challenging year, the manufacturing, construction, energy and mining sectors contributed positively to a province that continues to strongly attract new business investment and labour" said Lynda Taylor, Vice-President, Manitoba and Northwestern Ontario, BMO Bank of Montreal. "Consumer confidence witnessed through strong retail sales and a steady housing market bodes well for the year ahead."

The Province began this fiscal year in better-than-expected shape. The Public Accounts reported a deficit of $298 million in fiscal 2011-2012, lower than the $467 million estimated in the Budget, owing to higher revenue and lower expenditure. Decreasing deficits are projected to continue for another two years, before the Province returns to a surplus position in fiscal 2014-2015 ($185 million).

The full Provincial Monitor can be downloaded at www.bmocm.com/economics.

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