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CALGARY, January 12, 2011 – Alberta's energy sector has re-awakened from recession and should fuel above-average growth in 2011 and beyond, according to the Provincial Monitor report released today by BMO Capital Markets Economics.

“Drilling activity in the province was 31 per cent above year-ago levels through September, and rig utilization was at nearly 50 per cent in October compared to just 22 per cent in the same month last year,” according to Robert Kavcic, Economist, BMO Capital Markets. “At the same time, exploration land sales topped $2 billion in the first three quarters of the year, already surpassing the record set in 2005. While Alberta expects stagnant conventional crude and weaker natural gas production in the next two years, raw bitumen production is expected to grow about 10 per cent per year to more than 2 million barrels per day.”

While Alberta saw 3.6 per cent GDP growth in 2010, the province is still a long way from the capacity constraints of the commodity boom. As a result, an immediate return to a sub-4 per cent jobless rate, lofty wage growth and rampant housing starts is unlikely.

While the energy sector is humming, the housing sector has softened. Existing home sales were 20 per cent below year-ago levels in November, average prices are still about 6 per cent below the 2007 peak and starts have lost momentum after a strong bounce in 2009. “Given the pre-recession excesses in this sector, and current market conditions that somewhat looser than the rest of Canada, growth in the housing sector is expected to be modest in 2011,” said Mr. Kavcic.

After lagging somewhat early in the recovery, Alberta's labour market is now gaining momentum. Private-sector jobs were up 3.3 per cent year-over-year in the fourth quarter and the unemployment rate has moved sharply lower to 5.6 per cent. “The private sector is at the forefront of employment growth in Alberta,” said Bill Hogg, District Vice-President, Commercial, Alberta, BMO Bank of Montreal. “We can expect Alberta job growth to lead the country in the coming year.”

The Province of Alberta widened its fiscal 2010/2011 deficit estimate by $250 million to $5.0 billion, due to lower income tax and non-renewable resource revenues.

The complete report can be found at www.bmocm.com/economics.

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Media Contact:

Laurie Grant, Vancouver, laurie.grant@bmo.com, (604) 665-7596