ST. JOHN'S, NEWFOUNDLAND and LABRADOR--(Marketwire - Oct. 9, 2012) - While Newfoundland & Labrador's economy is expected to see weaker growth in 2012, this masks some otherwise positive trends, according to the Provincial Monitor report released today by BMO Economics. Real GDP growth is expected to slow to just 1.0 per cent this year, largely due to a maintenance-related drop in oil production, but growth should rebound 3.3 per cent in 2013.
"Construction and capital investment activity have been key economic drivers in the province in recent years, and growth has continued at a strong clip in 2012," said Robert Kavcic, Economist, BMO Capital Markets. "Total capital expenditures are expected to jump 27 per cent this year, a similar pace to that seen in the prior two years, with the private sector - mainly in resource industries - doing most of the lifting. Major private-sector projects are ongoing in the iron ore sector, development of the Hebron platform continues, and development of Muskrat Falls is in the pipeline."
Mr. Kavcic noted that offshore oil production is forecast to fall this year given a maintenance shutdown at Terra Nova, with output down 10.5 per cent year-over-year during the first half of 2012. "While output should bounce back next year, the longer-term trend remains downward given that overall output has peaked until Hebron is on stream later in the decade."
"Despite the maintenance-related declines in oil production, we are seeing solid business growth in construction and capital investments," said Jim Fallon, District Vice President, Newfoundland & Labrador, BMO Bank of Montreal. "In communities across the province, entrepreneurs are also showing a solid level of optimism and small businesses continue to be a strong source of strength."
Other underlying economic trends in the province are solid. "Employment was up 3.8 per cent year-over-year in September, and construction jobs remain elevated despite some falloff in recent months," stated Mr. Kavcic. "The jobless rate was down 1.3 percentage points in the past year to 12.3 per cent, but still up from the record low of 11.3 per cent in April 2011. Meanwhile, average weekly earnings are up a heated 6.9 per cent year-over-year. The sturdy labour market performance has helped support retail sales trends, but outward migration flows have picked up in recent quarters, a trend that could weigh on domestic housing and retailers if it persists."
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.