REGINA, SASKATCHEWAN--(Marketwire - May 3, 2012) - Saskatchewan's economy remains among the top performers in Canada, boosted by a strong resource sector, healthy labour market and firm population growth, according to the Provincial Monitor report released today by BMO Economics. Real GDP expanded 4.8 per cent in 2011, and should continue to grow at a near-3 per cent pace this year.
"Resource-sector activity is robust in the province," said Robert Kavcic, Economist, BMO Capital Markets. "Investment in the sector remains strong, with BHP Billiton's Jansen mine on track to begin production in 2015, and K+S moving forward on a $3.5 billion investment in its Legacy Project. Exploration activity in the oil & gas sector is also strong in the Bakken, and the Province is expecting 13.3 per cent growth in oil production in FY2012 - 2013."
Mr. Kavcic noted that potash production rose 14 per cent last year after more than doubling in 2010, but production began to tail off late in the year as producers cut back output to combat a weaker price environment. "This is one factor that could cause growth to decelerate in 2012," said Mr. Kavcic.
Strength in resources is spilling over into other sectors of the economy, including retail and construction. "Retail sales jumped 8.5 per cent in 2011, the strongest pace in Canada, while capital spending rose more than 10 per cent, and is estimated to grow a further 4.2 per cent this year," stated Mr. Kavcic. "Labour markets also remain tight, with the jobless rate sitting at 4.8 per cent in March - Canada's lowest - helping to drive solid wage growth."
"Saskatchewan continues to be a very attractive place to live, work and invest," said Mike Darling, District Vice-President, Saskatchewan, BMO Bank of Montreal. "With a solid economic and fiscal foundation, we are seeing strong demand for labour, robust consumer confidence, and businesses that are investing and building for future growth - not just in the resources sector, but across the entire spectrum."
Solid job prospects and relatively low living costs are spurring population growth which, at 1.6 per cent year-over-year in Q1, continues to run ahead of the national rate (1.1 per cent). Against that backdrop, housing is performing well, with average prices up 8.9 per cent year-over-year in March, while sales have jumped 35 per cent year over year.
The Province of Saskatchewan is projecting a $47.5 million surplus in the General Revenue Fund in fiscal 2012-2013, a rare achievement on the provincial landscape this fiscal year. The fiscal 2011-2012 surplus of $353 million is unchanged from the most recent update. "The fiscal outlook is also based on reasonable economic growth assumptions, but the wild card, as always, is commodity prices, and any material correction in oil and/or potash would have serious revenue implications for the Province," said Mr. Kavcic.
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.