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BMO Economics: New Brunswick Growth Set to Improve in 2013

FREDERICTON, NEW BRUNSWICK--(Marketwire - Jan 17, 2013) - A return to 3 per cent-plus growth in the U.S. by the end of the year should benefit New Brunswick''s export sector, according to the Provincial Monitor report released today by BMO Economics. Growth should come in at 1.6 per cent in 2013, an increase from 1.0 per cent in 2012.

"Potash Corp''s Sussex mine development and the Point Lepreau nuclear plant refurbishment will each be completed shortly, leading to higher output," said Robert Kavcic, Senior Economist, BMO Capital Markets. 

However, capital spending in both the public and private sectors remains weak as some major projects wind down and fiscal restraint is ongoing. "Real non-residential construction was down a steep 25 per cent year-over-year in the third quarter of 2012, largely reflecting a 40 per cent year-over-year falloff in institutional & government investment," noted Mr. Kavcic. 

Meantime, with U.S. growth still expected to be soft in the first half of the year and the loonie around parity, exports and manufacturing will face ongoing headwinds. Labour market trends reflect the soft economic backdrop, with employment down 1.9 per cent year-over-year in December and the jobless rate elevated near 11 per cent.

"The forecast for new potash production this year is definitely a positive, and our business community continues to focus on making critical investments in their operations to improve productivity," said Allison Hakomaki, District Vice President, New Brunswick and PEI, BMO Bank of Montreal. "Over the past year, many of our exporters have successfully adapted to the economic reality of a strong loonie and have diversified their supply chains and export markets beyond their traditionally strong ties to the U.S. This year they are more optimistic about their growth prospects, despite the economic challenges."

The Province of New Brunswick revised up its fiscal 2012-2013 deficit estimate to $357 million, or about 1.1 per cent of GDP, from $183 million projected in the budget. The worsened outlook is the combined result of weaker-than-expected tax revenues and higher-than-expected spending. Total revenues are now pegged at $7.9 billion, a $123 million (-1.8 per cent) reduction from the budget forecast, with more than half of the revision the result of lower personal income tax receipts.

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 $525 billion as at October 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.