Steady growth expected in central Canada in 2018, says BMO
Ontario's economy remains a national and regional growth leader, with expected GDP growth of three per cent in 2017, an above-potential pace for the province
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TORONTO—Central Canada is expected to see continued steady growth as a result of strong labour markets and increased employment in 2018, according to the BMO Blue Book report by BMO Capital Markets Economics and BMO Commercial Banking.
The report combines the insights of BMO’s economists with information on current national and provincial business conditions provided to BMO’s commercial bankers by local business people.
Here’s a look at some provincial forecasts:
Ontario’s economy remains a national and regional growth leader, with expected GDP growth of three per cent in 2017, an above-potential pace for the province.
Robert Kavcic, Senior Economist at BMO Capital Markets, noted that the labour market continues to perform well, with employment growth among the strongest in Canada and the jobless rate below the national average for the first time since 2006. He added that for the first time in nine years, Ontario is projecting a balanced budget in FY17/18; this compares to a $1 billion deficit in FY16/17.
Ontario Highlights: Investment in Infrastructure, Technology & Out-Of-Province Immigration
In Eastern Ontario, infrastructure development, such as the expansion of Highway 407 and Ottawa’s new Confederation Line, has provided an opportunity for housing development and business investment in the region.
In Southwestern Ontario, the technology sector continues to show impressive strength, particularly in Kitchener-Waterloo and the London region.
In the Greater Toronto Area, the labour market, transportation developments and strength in manufacturing continue to drive growth in the region.
“The excitement and strength that the GTA’s economy has shown over the past few years continues, and its impact on national and provincial growth remains impressive,” said Steve Murphy, Senior Vice President, GTA Division, BMO Bank of Montreal.
Mr. Murphy added that Canadians who are new to the province are opening businesses in a wide variety of industries, which in turn serves to diversify the regional economy further.
Quebec is on pace for the best economic performance in 15 years, largely as a result of some of the strongest job growth in the country and a below-average jobless rate.
Mr. Kavcic noted that Quebec’s real GDP has improved dramatically and is on pace to grow 2.7 per cent this year, up from 1.7 per cent last year.
“The labour market in the province continues to perform well—the jobless rate recently hit a record low of 5.8 per cent, and is now trending consistently below the national average,” said Mr. Kavcic.
“There is a renewed strength in both employment and growth as a result of the increased infrastructure spending, particularly in major cities like Montreal and Quebec City,” added Mario Rigante, Senior Vice President, Quebec Division, BMO Bank of Montreal.
Manitoba’s real GDP is expected to rise 2.1 per cent this year, maintaining a consistent growth trend in the province over the last several years. An upswing in manufacturing and the labour market, coupled with a stable housing market, are top contributing factors.
“Labour market momentum is improving, with employment up 1.2 per cent y/y in Q2,” said Mr. Kavcic. “The jobless rate has also begun to fall sharply, now sitting at 4.9 per cent after reaching a twenty-year high of 6.5 per cent at one point last year.”
“The last four to five years have seen a change in confidence, leading to investments in projects – particularly in Winnipeg,” said John MacAulay, Senior Vice President for Prairies and Central Canada, BMO Bank of Montreal. “There hasn’t been this much business activity growth in the province since 1967.”
Here are some highlights of the forecast for other regions in Canada:
- Alberta’s economy is anticipated to grow 4.1 per cent, outperforming all provinces after overcoming the negative impact of the wildfire last year.
- British Columbia is positioned for growth in excess of 3 per cent for a fourth consecutive year, backed by strong labour market and consumer spending trends.
- Saskatchewan is expected to return to modest growth of 1.7 per cent, as the effect of the oil price downturn lingers.
- Momentum has carried into New Brunswick, with anticipated growth of 1.5 per cent, before decelerating to under 1 per cent next year as a result of demographic headwinds.
- Nova Scotia and PEI are expected to experience growth close to 2 per cent and boast more favourable fiscal backdrops.
- Newfoundland & Labrador GDP will likely contract 2 per cent, as major capital spending projects reach completion.