FREDERICTON, NEW BRUNSWICK--(Marketwire - Oct. 9, 2012) - The legacy of recent private-sector capital spending should lead to higher output in the New Brunswick mining sector and contribute to growth, according to the Provincial Monitor report released today by BMO Economics. However, economic growth remains sluggish because of struggles in the labour market and reduced investment activity because of fiscal restraint. Growth should come in at 1.5 per cent in 2012, but rise to 1.8 per cent in 2013.
"Potash Corp's Sussex mine development will lead to higher output next year," said Robert Kavcic, Economist, BMO Capital Markets. "Meanwhile, the Point Lepreau nuclear plant will be back online after a multi-year refurbishment."
Capital spending in both the public and private sectors is weakening as some major projects wind down and fiscal restraint is ongoing. Real non-residential construction was down 25 per cent year-over-year in the first half of 2012, and institutional & government investment was down more than 36 per cent.
"With U.S. growth still modest and the loonie above parity, exports and manufacturing will face ongoing headwinds," noted Mr. Kavcic. "Export growth has cooled notably during the first half of 2012, largely reflecting lower prices received for energy and mineral products."
"While the forecast for new potash production next year is a positive, our business community continues to focus on adapting to the current economic environment and making critical investments in their operations to improve productivity," said Allison Hakomaki, District Vice President, New Brunswick and PEI, BMO Bank of Montreal. "With a stronger loonie, many of our exporters have approached the challenge as an opportunity to diversify their supply chains and export markets beyond their traditionally strong ties to the U.S."
Employment, while still extremely volatile, has stabilized in recent months. However, total employment was down 0.9 per cent from prior-year levels in September after a steep multi-month decline in public-sector jobs. As a result, the jobless rate has climbed to 11 per cent, the highest level in 7 years.
The full Provincial Monitor 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 July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.