VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 3, 2012) - The British Columbia economy has cooled, but should still grow 2.3 per cent this year and rebound to 2.7 per cent in 2013, according to the Provincial Monitor report released today by BMO Economics.
"The B.C. economy has been affected by a number of headwinds, including a cooling housing market, weaker Asian export demand and still-moderate U.S. economic growth," said Robert Kavcic, Economist, BMO Capital Markets. "That said, employment was up 1.6 per cent year-over-year in March, led by growth in business services and manufacturing.
"The Vancouver labour market is performing particularly well with employment rising 2.8 per cent year over year in the first quarter, while the jobless rate has fallen to 6.6 per cent, below both provincial and national averages," said Mr. Kavcic. "We are forecasting 60,000 new jobs in Greater Vancouver by 2016."
The B.C. housing market has come off the boil, with sales and average prices weakening from recent highs in early 2011. "Average prices in Vancouver were down 3.1 per cent year over year in March, compared to the 20 per cent-plus increases we saw a year ago," noted Mr. Kavcic. "Sales in the city are now running about 10 per cent below the 10-year average, and new listings are only somewhat elevated compared to historical norms."
Meanwhile, the condo market continues to lead new building activity, with units under construction up 32 per cent year-over-year in Vancouver in February, and the number of newly completed and unoccupied units near the highest level in 12 years. At the same time, a cooling Chinese property market has sapped some momentum from recently robust forestry exports to that region. Lumber exports to China surged 61 per cent to more than $1 billion in 2011, but growth eased late in the year and activity should be more stable in 2012.
"Despite the moderating effect of the global economic climate, our commercial customers remain optimistic about their business prospects," said Derral Moriyama, Senior Vice-President, Commercial, Greater Vancouver District, BMO Bank of Montreal. "Manufacturers in particular who made the decision 12 to 18 months ago to upgrade their infrastructure and retool their processes, are beginning to see a lift from those strategic investments. They are now better positioned to capitalize on trade opportunities when the U.S. economy picks up speed and continue to further diversify their business within the increasingly important Pacific basin."
The provincial government is forecasting a $968 million deficit for fiscal 2012-2013, a $1.5 billion improvement over the prior year's $2.5 billion shortfall. The latter marks an improvement over the $3.1 billion projected in the most recent update due, in part, to higher revenues and a lower forecast allowance. The Province remains committed to eliminating the deficit by fiscal 2013-2014, with a $154 million surplus projected, through a combination of spending restraint and asset sales totaling $700 million.
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 $538 billion as at January 31, 2012, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.