BMO Economics: Stronger U.S. Growth to Support Ontario Economy Later
- Auto manufacturers investing in Ontario, including Toyota with
Woodstock assembly plant
- Housing market continuing to soften
- Real GDP growth of 1.7 per cent expected in 2013 (Canada's expected
to be 1.7 per cent)
TORONTO, ONTARIO -- (Marketwire) -- 01/17/13 -- Continued investment
in the auto sector represents a bright spot for the Ontario economy,
according to the Provincial Monitor report released today by BMO
Economics. Real GDP is expected to grow at the national average of
1.7 per cent in 2013, with momentum picking up later in the year once
U.S. growth begins to run at a 3 per cent-plus clip.
"While auto production has leveled off in recent months, output in
the sector was still up 16 per cent year-over-year in 2012," said
Robert Kavcic, Senior Economist, BMO Capital Markets. "Auto producers
continue to invest in North America and, despite a strong currency
and higher labour costs compared to the southern U.S. and Mexico,
Ontario is no exception. Toyota, for example, is expanding production
at its Woodstock assembly plant - about 400 jobs. Still, Ontario's
manufacturing base is not immune to a strong loonie and relatively
high labour costs."
"While interest rates, the loonie and the U.S. economy remain top
issues for Ontario businesses, our commercial customers continue to
show optimism about their business prospects," said Janet Peddigrew,
District Vice President, BMO Bank of Montreal. "The availability of
credit and attractive investment opportunities contribute to this
optimism, despite the potential challenges."
The housing market continues to cool in the province, and the
stricter mortgage rules introduced last July have had a clear
negative impact on sales activity. "Existing home sales in Toronto
slid nearly 20 per cent year-over-year in December, and price growth
has cooled notably," stated Mr. Kavcic. "In the condo segment, for
example, average prices were slightly below year-ago levels in
December; barring a snapback in demand during this spring's selling
season, they could face continued downward pressure as a wave of
completions potentially hit the resale market in 2013."
Job growth was a sluggish 0.8 per cent in 2012, though momentum
p later in the year alongside gains in the service sector.
"The jobless rate ended 2012 at 7.9 per cent, up 0.2 percentage
points from the end of 2011, and is expected to fall only modestly in
the year ahead before better momentum takes hold in 2014," noted Mr.
The Province of Ontario has lowered its fiscal 2012-2013 deficit
projection by $782 million since the budget, to $14.4 billion, thanks
to higher revenues generated by better-than-expected economic
performance in 2011 and early 2012, and the introduction of a
high-income tax bracket. However, the shortfall remains hefty at
about 2.2 per cent of GDP, the deepest gap among all provinces.
Longer term, the timing for a balanced budget is unchanged at fiscal
The full Provincial Monitor can be downloaded at
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 $525 billion as at October 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
Peter Scott, Toronto
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