News Releases

TORONTO, ONTARIO--(Marketwired - May 7, 2014) - Economic growth is expected to pick up in Ontario, receiving a boost from a stronger U.S. demand and a weaker Canadian dollar, according to the BMO Blue Book released today by BMO Capital Markets Economics and BMO Commercial Banking.

Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the expertise of BMO's economists with information on current business conditions provided to BMO's commercial bankers by local businesspeople.

"Real GDP is expected to expand 2.2 per cent this year, up from 1.2 per cent in 2013, and pick up further to 2.4 per cent in 2014," said Robert Kavcic, Senior Economist, BMO Capital Markets. "While the cyclical environment is improving for Ontario exporters and manufacturers, the longer-term story remains a cautious one."

Manufacturing – a key industry in Western Ontario – has benefited from the lower Canadian dollar and the stronger U.S. economy, after a number of difficult years. Susan Brown, Senior Vice President, South Western Ontario Division, BMO Bank of Montreal states, "Interestingly, our manufacturing customers have told us they can cope with whatever price the currency happens to be – what causes them the most difficulty is the pace of change."

"Our customers in Eastern Ontario continue to take advantage of major opportunities, leading to a good degree of optimism," Sandra Henderson, Senior Vice President, Eastern Ontario Division, BMO Bank of Montreal. "Across the region, our customers have told us that investments in municipalities, universities, schools and hospitals continue, with capital spending in major centres like Ottawa and Kingston. Trades, along with construction and engineering firms, have benefited significantly as a result."

The report also found that the housing market continues to hold up well – especially in Toronto – where the resale market remains balanced and valuations are within historical ranges.

Mr. Kavcic noted that Ontario's labour market performance has softened, with employment up a modest 0.7 per cent year-over-year in the first quarter of 2014. "While public-sector employment has fallen in the past year, the private sector has picked up the slack."

Eastern Ontario

Victor Pellegrino, Regional Vice President, Commercial Banking, Eastern Ontario Division, BMO Bank of Montreal reports that the Greater Kingston and Quinte regions have a history of financial stability and sees steady commercial growth at a moderate pace. Kingston benefits from the high concentration of hospitals, universities, colleges and federal institutions; as well as being a popular tourist destination.

Mr. Pellegrino added, "After a long period of consolidation, we are seeing an uptick in activity across the Ottawa region as technology companies take advantage of opportunities created by the recovering Canadian and U.S. economies."

Western Ontario

Rick Jaques, Regional Vice President, Commercial Banking, Southwestern Ontario reports that the high-tech sector in Kitchener-Waterloo bears watching, especially given the situation at BlackBerry. "The good news is while there's unease, the business climate hasn't been seriously affected. Most people within the region are finding alternative employment, with other high-tech companies now able to access freed-up resources."

Looking at the agricultural industry, David Blyth, Regional Vice President, Commercial Banking, South Western Ontario, BMO Bank of Montreal observed that the greenhouse industry in the Leamington area was performing better last year, year-over-year compared to 2012 - a year when declining tomato prices negatively impacted farmers' income statements. "Although the past winter was one of the coldest on record, our customers fortunately came off a much better year in 2013 and we are able to assist them when needed."

Mr. Blyth also noted that the Heinz plant closure has caused a significant ripple effect in the market; however the recent announcement of re-purposing of plant and the potential to save 400 jobs has helped calm the marketplace.

The Greater Toronto Area

Bill Wu, Regional Vice President, Commercial Banking, GTA North, BMO Bank of Montreal, noted that the Greater Toronto Area remains a healthy market with lots of activity among the bank's diverse set of customers. "Business owners and operators have a healthy amount of optimism about the next six months, although their enthusiasm is tempered by caution for the longer term."

Construction related to the 2015 Pan American Games, both in terms of venues and corresponding infrastructure, continues to grow across the region. Doug Palmer, Regional Vice President, Commercial Banking, GTA Central, BMO Bank of Montreal said, "Combined with other infrastructure builds such as hospitals, court house rebuilds and schools, the ongoing supply of major projects represents good news for local contractors."

Mr. Palmer added that BMO is armed with a highly-skilled team of experts that can make lending decisions at the local level to help its commercial clients boost productivity, expand into new markets and make strategic investment decisions that will help propel growth and drive success.

The full BMO Blue Book 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 financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had total assets of $593 billion and more than 45,500 employees at January 31, 2014.