(September 6 – 16:00 ET) – Bank of Montreal says that Ontario and Alberta are the leading provincial economies, thanks to strong growth in manufacturing and high prices for energy products.
BMO’s Canadian Regional Outlook projects Ontario to grow by 5.3% this year, driven by continued strong exports to the U.S. and healthy domestic demand. All sectors of the economy are contributing to another year of strong economic growth, with the “new economy” particularly strong, and the automotive sector too.
Alberta is riding a wave of higher energy prices. The benefit of surging oil and gas sectors is spilling over into strong business investment and household spending. BMO economists are projecting the Alberta economy to grow by 5.0% this year, pushing the province’s unemployment rate down to an average of 4.9%.
BMO says most of the other provinces are improving their performance.
Several engines are driving growth in Quebec, although it is led by the “new economy”. BMO is calling for a significant increase in business spending in Quebec in 2000, due, in part, to increased corporate profitability. “The most intriguing aspect of Quebec’s growth in recent years has been the dramatic expansion in new-economy industries,” said Tim O’Neill, chief economist.
Newfoundland and Labrador is expected to grow at 4.8% this year, accelerating to 5.1% next year, thanks to its natural resources. BMO suggests Newfoundland may be the only province to see growth accelerate in 2001. “Increased output from Hibernia and new production from Terra Nova will spur the economy next year,” said O’Neill.
In Saskatchewan the picture is mixed, but the pace of job creation through the first seven months of the year is encouraging, says BMO. The province’s oil and gas sector is one source of strength so far this year, but agriculture continues to suffer from low grain and oilseed prices.
Manitoba’s economy should see improvement in the second half of this year, thanks to improvements in the construction, manufacturing and mining sectors. Building permits suggest an upturn in non-residential construction activity in the second half, and a modest increase in house construction.
There are signs of recovery in B.C., thanks to stronger commodity markets. Increased demand for pulp and paper has pushed prices higher and stronger world markets for base metals have led B.C. producers to step up production.
Nova Scotia’s economy is benefiting from sharp growth during the first half of this year in international exports of seafood, pulp products and products related to the motor-vehicle industry.
Consumer optimism, robust construction activity and strong export markets is giving the PEI economy a strong push. BMO attributes the increased spending to a combination of federal and provincial tax cuts and strong job creation through the first half of this year. “We project that the province will lead the nation in employment growth, coming in at 5.0% in 2000,” said O’Neill.
Expanding exporters and spending consumers continue to fuel New Brunswick’s economy. Growth in natural-resource-based exports, particularly paper and refined-oil products, are key to the province’s continuing expansion.
Next year higher interest rates are expected to cool the hot U.S. expansion. “We’re still expecting growth south of the border,” noted O’Neill, “We’re just not expecting it to be as strong. That will slow the export-led growth in most provinces.”
-IE Staff