BMO Economics: B.C. Economy Set for Steady Growth

BMO Economics: B.C. Economy Set for Steady Growth 
- Employment up 1.7 per cent in 2012  
- Solid growth for resources, financial services  
- Real GDP growth of 2.2 per cent expected in 2013 (Canada's expected
to be 1.7 per cent) 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 01/17/13 -- Real GDP
in B.C. is likely to grow 2.2 per cent this year, according to the
Provincial Monitor report released today by BMO Economics. However, a
few headwinds are keeping growth in check, such as a slowing domestic
housing market and weaker Asian export demand, though a resurgent
U.S. housing market will likely support exports in 2013. 
"B.C.'s labour market is performing decently, with employment up 1.7
per cent in 2012 and the unemployment rate ending the year at 6.5 per
cent," said Robert Kavcic, Senior Economist, BMO Capital Markets.
"While construction employment has fallen in the past year,
reflecting a softer residential sector and a post-stimulus spending
lull, resources and financial services have posted solid growth." 
Mr. Kavcic noted that the post-recession surge in housing market
activity has morphed into a correction, particularly in Vancouver and
Victoria. "Prices in Vancouver were 2.3 per cent below year-ago
levels in December and down almost 6 per cent since their peak in
May, before mortgage rules were tightened further. Falling prices
come amid weaker demand and ample supply-province-wide existing home
sales are running about 25 per cent below the 10-year trend and
active listings are at the highest levels since the recession. With
continued weakening expected in the housing market, construction
activity is expected to soften in 2013." 
B.C.'s economy is being affected by growth in China slowing to a 7.4
per cent year-over-year pace in Q3 and the U.S. economy struggling to
churn out growth of more than 2 per cent. "Exports were down 2 per
cent year-over-year through October," stated Mr. Kavcic. "However, a
strengthening recovery in the housing market should lift U.S.
economic growth above 3 per cent in the second half of the year,
supporting forestry and consumer-related exports, while growth in
China looks to have bottomed." 
"Our commercial customers remain optimistic about their business
prospects," said Dean Kirkham, Vice President, Commercial Banki
Greater Vancouver, BMO Bank of Montreal. "Manufacturers in
particular, who made the decision to upgrade their infrastructure and
retool their processes, are beginning to see a lift from those
strategic investments. Our BMO Confidence Report shows the majority
of B.C. entrepreneurs are confident and expect their business to grow
this year." 
The Province of British Columbia is projecting a $1.5 billion deficit
(about 0.7 per cent of GDP) in fiscal 2012-2013, larger than the $968
million shortfall expected in the budget. Revenue is now $579 million
lower than the budget plan, while total spending is $87 billion
higher. The Province still aims to balance the budget next fiscal
year, in part thanks to savings in government operations and salary
and hiring freezes for non-union public-sector employees.  
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
Media contacts:
Laurie Grant, Vancouver
(604) 665-7596 
Twitter: @BMOmedia
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