BMO Bank of Montreal
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BMO Bank of Montreal

July 27, 2011 10:00 ET

BMO Study: 44 per cent of Canadians believe businesses in their community will grow this year

- Only 8 per cent believe that local businesses in their community will shrink

- Manitoba, Saskatchewan, Alberta and B.C. show highest levels of optimism

- Optimism mirrors different levels of growth across the country, says BMO Economics

TORONTO, ONTARIO--(Marketwire - July 27, 2011) - A national study released by BMO Bank of Montreal today reveals that 44 per cent of Canadians surveyed are optimistic that businesses in their own community will experience growth this year, while only 8 per cent see local business activity shrinking.

"These survey numbers show that Canadians are cautiously optimistic about the economy and the growth prospects for businesses in their home communities," said Cathy Pin, Vice President, Commercial Banking, BMO Bank of Montreal. "In this current economic environment, we encourage businesses to take advantage of the opportunity to make strategic spending and investment decisions - such as upgrading equipment, training and processes - in order to improve productivity and better position themselves for a future strengthening in consumer confidence," added Pin.

The survey, conducted by Leger Marketing, shows higher levels of optimism about local business growth in Western Canada (Manitoba/Saskatchewan at 55 per cent, Alberta at 53 per cent, and British Columbia at 49 per cent) compared to Quebec at 37 per cent.

"The differences in optimism reflected in the survey mirror the different levels of economic growth across the country," said Robert Kavcic, Economist, BMO Capital Markets. "Optimism is highest where we project the strongest growth, such as in Saskatchewan and Alberta, with lower levels reflecting below-average economic growth in Ontario and Quebec."

According to BMO Economics, the Canadian economy has shifted from the recovery phase to a more mature expansion, with real GDP now expected to grow a moderate 2.8 per cent in 2011, before easing to 2.6 per cent in 2012. At the regional level there is a clear divide between the commodity-producing provinces and non-commodity provinces, with Western Canada and Newfoundland & Labrador expected to grow 3 per cent to 4 per cent this year, Central Canada growing slightly below 3 per cent and Atlantic Canada at around a 2 per cent pace.

Below is the BMO Economics forecast, followed by key survey findings, for each region, from the Leger survey:

British Columbia

  • BC's growth is expected to be 3.0 per cent in 2011 and slightly higher in 2012.
  • 49 per cent in British Columbia believe businesses will grow (38 per cent stay the same, 9 per cent shrink).

Alberta

  • Alberta's growth is expected to be among the strongest in the country, at 3.6 per cent this year and 3.4 per cent in 2012.
  • 53 per cent in Alberta believe businesses will grow (41 per cent stay the same, 5 per cent shrink).

Manitoba/Saskatchewan

  • Saskatchewan's economic growth will lead the country in 2011, and Manitoba continues to perform well despite some short-term challenges in the agriculture sector. Given the economic strength seen in the region, these survey results are no surprise.
  • 55 per cent in the provinces believe businesses will grow (36 per cent stay the same, 5 per cent shrink).

Ontario

  • A strong Canadian dollar and fiscal restraint will hold Ontario's economic growth below the national average. The lower levels of optimism compared to the rest of the country reflect the Ontario economy's slowing momentum after a strong post-recession rebound.
  • 43 per cent in Ontario believe businesses will grow (44 per cent stay the same, 10 per cent shrink).

Quebec

  • Economic growth is expected to cool in Quebec this year to a 2.4 per cent pace, as fiscal restraint ramps up and the strong Canadian dollar weighs on exports and manufacturing. The lower levels of optimism compared to the rest of the country reflect the Quebec economy's below-average performance.
  • 37 per cent in Quebec believe businesses will grow (53 per cent stay the same, 7 per cent shrink).

Atlantic Provinces

  • Economic growth in Newfoundland & Labrador is easily outpacing the performance of the other Atlantic provinces. The optimism shown in the survey results is encouraging, although the high levels are probably a result of continued strong growth in Canada's easternmost province.
  • 47 per cent in the region believe businesses will grow (36 per cent stay the same, 9 per cent shrink).

The online survey was conducted by Leger Marketing between May 30 – June 1, 2011, using a sample of 1504 Canadians, 18 years of age or older. A probability sample of the same size would yield a margin of error of ±2.5 per cent, 19 times out of 20.

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