BMO Financial Group
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BMO Financial Group

October 16, 2014 09:21 ET

BMO Economics: Stable and Solid Trends Contribute to Saskatchewan Growth

- Real GDP growth of 1.0 per cent expected in 2014, 2.7 per cent in 2015 (Canadian real GDP growth of 2.3 per cent expected in 2014, 2.4 per cent in 2015)

- Oil sector now 20 per cent of province's GDP

- Population growth strong; labour market making case for national lead

REGINA, SASKATCHEWAN--(Marketwired - Oct. 16, 2014) - Saskatchewan's economy continues to outperform, supported by a diverse resource base and healthy demographic trends, according to the Provincial Monitor report released today by BMO Economics. While a fall in crop production will lead to growth in the province of just 1.0 per cent in 2014, a jump back up to 2.7 per cent growth is expected next year.

"Saskatchewan is seeing stable and solid overall economic trends," said Robert Kavcic, Senior Economist, BMO Capital Markets. "The oil sector continues to expand, accounting for nearly 20 per cent of the province's real GDP with direct royalties alone accounting for 13 per cent of total government revenues. This is good news given uncertainty and softening activity in the potash sector, which faces weaker demand in China and India, as well as a shift to a lower pricing environment after the breakdown of a major joint venture between Uralkali of Russia and Belaruskali of Belarus."

The labour market continues to perform well, and the province is making a case to be crowned the new Canadian leader. "Employment has popped 3.3 per cent in the past year - leading the country," noted Mr. Kavcic. "The jobless rate fell back down to 3.5 per cent in September - lowest in Canada - and the employment rate hit a record high at just under 68 per cent, second among all the provinces. Median hourly wages trails only Alberta, but its growth is actually running faster."

Population growth remains strong in the province, near the fastest pace in 60 years at 1.7 per cent year over year in the third quarter of 2014. "Saskatchewan continues to see steady, albeit modest, inward interprovincial migration," stated Mr. Kavcic. "That continues to support the demand side of the housing market - sales are currently near record levels - but ample supply has softened the pricing environment."

The agriculture sector is experiencing volatility in crop production. "The farm sector enjoyed a bumper crop in 2013, with a near-40 per cent jump in crop production to a record 38.4 million tonnes," said Mr. Kavcic. "This year, however, production is expected to fall sharply back toward more normal levels, with recent estimates pegging wheat and canola down more than 20 per cent for the year. That could cut almost 1.5 percentage points from real GDP growth."

"The economy in Saskatchewan continues to outperform many of the other provinces," said John MacAulay, Senior Vice President, Prairies and Central Canada Division, BMO Bank of Montreal. "Our clients have indicated that a number of factors continue to support their optimism, including the diverse resource base and expanding oil sector. However, the most significant indicator is the population boom - nearly the fastest in 60 years - which is supporting a variety of infrastructure initiatives."

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 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 more than $586 billion in total assets and approximately 47,000 employees at July 31, 2014.

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