VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 9, 2012) - Economic activity remains steady in British Columbia, with GDP growth of 2.5 per cent expected this year, and 2.4 per cent growth in 2013, according to the Provincial Monitor report released today by BMO Economics.
"A few headwinds are keeping the economy in check, including a softening housing market, weaker Asian export demand and still-sluggish U.S. economic growth," said Robert Kavcic, Economist, BMO Capital Markets.
"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. Our recent Small Business Confidence Report shows 71 per cent of B.C. entrepreneurs are confident and the majority expects their business to grow next year."
Mr. Kavcic noted that after pent-up demand, low interest rates and foreign investment pushed home prices significantly higher after the recession, a buyers' market has now emerged across much of British Columbia, including Vancouver. "Prices in the city were below year-ago levels in August for the first time since the recession. Softer prices are the result of weaker demand and ample supply -existing home sales are running about 30 per cent below the 10-year trend and active listings are near the highest level since the recession. The condo market remains more amply supplied, with just under 17,000 units under construction in Vancouver in August - up 31 per cent from the same month last year."
However, Mr. Kavcic also said that a recovery in U.S. housing could be good news for B.C.'s forestry sector. "Employment is up 1.3 per cent year-over-year in September. Construction employment has fallen in 8 of the past 10 months but manufacturing employment has risen sharply in the past year. The jobless rate is relatively steady, remaining around 7 per cent."
Externally, a weakening Chinese economy and sluggish U.S. growth are dampening the export sector. Exports were down 5.6 per cent year-over-year in July as energy and industrial goods were lower. This follows a strong year for exporters in 2011 that saw shipments to China surge 25 per cent to a noteworthy 15 per cent of total exports.
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.