TORONTO, ONTARIO--(Marketwired - Oct. 30, 2013) - Strengthening in the U.S. economy should provide much-needed support for Canada's provinces in the year ahead, according to the Provincial Monitor report released today by BMO Economics.
"Boosted by high energy prices, Newfoundland & Labrador, Alberta and Saskatchewan remain on pace to post the country's highest growth rates this year, with good momentum leading into 2014," said Robert Kavcic, Senior Economist, BMO Capital Markets. "While flooding in southern Alberta was a major disruption this summer, the Province of Alberta estimates that repair and rebuilding activity will add 0.2 percentage points to real GDP growth in 2013."
Mr. Kavcic also identified British Columbia's housing market as one of the major turnaround stories of the summer. "Since bottoming in February, sales in the province have jumped nearly 40 per cent through September, and were more than 50 per cent above year-ago levels in Vancouver. That, plus a falloff in new listings, has all but quashed concerns of a hard landing."
For Central Canada, BMO Economics is forecasting firmer growth - particularly in Ontario with an increase to 2.2 per cent next year compared to 1.4 per cent in 2013. "This improvement in growth hinges on the U.S. expansion strengthening," stated Mr. Kavcic. "Private-sector employment in Ontario closely mirrors trends in U.S. GDP, and the correlation is the highest among all provinces."
"The provinces are in a solid economic position, which should help them to leverage the rising demands of the U.S. and remain on course to meet their growth trajectories," said Steve Murphy, Senior Vice President, Commercial Banking, BMO Bank of Montreal. "With high energy prices, a growing U.S. economy and infrastructure projects planned in provinces such as Alberta, now is a good time for businesses to make long-term investments in their operations to position themselves for growth in the near future"
In Atlantic Canada, a rebound in oil production and solid underlying conditions are supporting growth in Newfoundland & Labrador, with lower growth rates seen in the rest of the region. "After acting as a major support during the downturn, real non-residential investment in the government sector is now running 44 per cent below peak levels seen in early 2011," said Mr. Kavcic.
The full Provincial Monitor report 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 $549 billion as at July 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.