HALIFAX, NOVA SCOTIA--(Marketwire - Oct. 9, 2012) - Economic growth in Nova Scotia is poised to improve as the Federal shipbuilding contract will boost activity for years to come, according to the Provincial Monitor report released today by BMO Economics. Growth is expected to clock in at a still-sluggish 1.8 per cent pace in 2012, before picking up slightly to 2.3 per cent in 2013.
"The contract landed by Irving Shipbuilding to build combat ships for the Royal Canadian Navy is worth an estimated $25 billion through 2030," said Robert Kavcic, Economist, BMO Capital Markets. "About 8,000 new jobs - more than 1 per cent of total employment in the province - will be sustained over that period, and real GDP will see a boost of about $800 million per year on average. Some activity is assumed to get underway in 2013, though the full impact will be seen further out."
"Our commercial clients throughout Nova Scotia are confident and making important investments in new equipment, in expanding their operations and in hiring people," said Carolyn Booth, Senior Vice President, Atlantic Provinces, BMO Bank of Montreal. "I urge businesses to get their share of the $10 billion in credit BMO has made available, giving them access to the capital they need to grow."
The report notes that, while clearly positive for the Nova Scotia economy, the massive ship building project is not without challenges. "Nova Scotia needs skilled labour, some of which has already migrated to more lucrative labour markets in Western Canada," stated Mr. Kavcic.
Meanwhile, Encana's Deep Panuke natural gas project is expected to boost total exports in 2013, offsetting declining output at Sable. "Energy exports remain depressed by low natural gas prices, while forestry shipments fell to a record low in July amid plant idling and closures," noted Mr. Kavcic. "However, a deal between the Province and Pacific West Commercial Corp. will keep production rolling at the NewPage paper mill."
The labour market has performed relatively well in recent months, with a 4.9 per cent year-over-year jump in private-sector employment offsetting lower public sector payrolls. The jobless rate sat at 8.6 per cent in September, up 0.2 percentage points from a year ago due in part to a jump in the labour force participation rate.
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 $542 billion as at July 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.