TORONTO, ONTARIO--(Marketwired - Oct. 30, 2013) - While Ontario is currently showing subdued economic growth, real GDP should pick up in 2014 thanks to an improvement in demand from the United States, according to the Provincial Monitor report released today by BMO Economics.
"Real GDP is on pace to grow 1.4 per cent this year, but should reach 2.2 per cent in 2014 thanks to stronger U.S. demand," said Robert Kavcic, Senior Economist, BMO Capital Markets.
"The correlation between private-sector employment and trends in U.S. GDP in Ontario is the highest among all Canadian provinces," noted Mr. Kavcic. "While political uncertainty in Washington is doing no favours for business confidence, the good news is that growth south of the border should pick up to closer to 3 per cent by early 2014 - a pace that should be felt among Ontario exporters and manufacturers."
"Economic ties to the U.S. are typically most prevalent in Ontario, so the recent developments there have certainly had an impact on a number of businesses in this province," said Susan Brown, Senior Vice President, Ontario Regional Division, BMO Bank of Montreal. "The good news is that our commercial customers should benefit from the projected increase in demand south of the border in the near future."
Ontario's labour market performance remains steady, with 1.7 per cent year-over-year job growth in the third quarter of 2013 - ahead of the national average. "While public sector employment has fallen in recent months, the private sector has more than picked up the slack with gains in construction and trade," stated Mr. Kavcic. "The jobless rate sat at 7.3 per cent in September, matching the lowest level this cycle."
On the manufacturing side, auto production remains close to pre-recession levels and North American sales activity remain solid. "While Ford recently announced it will spend more than $800 million to expand its Oakville plant, the strong Canadian dollar and relatively high labour costs pose longer-term challenges for the sector versus lower-cost alternatives like Mexico and the southern U.S.," said Mr. Kavcic.
The housing market has firmed in the province, especially Toronto, according to Mr. Kavcic. "Existing home sales in Toronto have bounced more than 20 per cent year over year in recent months, and prices continue to push higher."
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 $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.