Atlantic Canada poised for moderate economic growth: RBC Economics

Atlantic Canada poised for moderate economic growth: RBC Economics 
Newfoundland and Labrador remain at the top of Canada's provincial growth 
rankings 
TORONTO, Sept. 17, 2013 /CNW/ - Atlantic Canada's economic growth is showing 
greater strength in comparison to 2012, primarily due to the exceptional 
economic performance of Newfoundland and Labrador, according to the latest RBC 
Economics Provincial Outlook released today. 
A rebound in the oil and gas sector, coupled with improving conditions for 
large-scale mining projects through the remainder of the year, is expected to 
propel Newfoundland and Labrador to the top of provincial growth rankings in 
2013. RBC forecasts robust 6.0 per cent growth for the provincial economy in 
2013. 
"We expect Newfoundland and Labrador to enjoy renewed economic vigour in 2013, 
on the heels of a significant pullback in crude oil production which hampered 
economic growth in 2012. Despite lacklustre performance so far this year, 
crude oil production levels through the end of 2013 are expected to yield a 
sizeable year-over-year boost in activity," said Craig Wright, senior 
vice-president and chief economist, RBC. "By next year, oil production will 
have recovered from depressed levels and will ease real GDP growth to 1.3 per 
cent in 2014." 
Despite the absence of a lift from oil production next year, RBC says the 
ramping up of work on the Hebron offshore oil project, a recently approved 
third extension at White Rose and two offshore oil discoveries this summer 
will pave the way for sustained contributions from the oil and gas sector as 
key economic drivers through the medium-term. 
After reaching a record high at the end of last year, employment in the 
province has been experiencing a softening trend in recent months. This 
decline was accompanied by a larger exit of participants from the labour 
force, resulting in the unemployment rate drifting lower. Comparing closely to 
national averages, RBC forecasts employment in Newfoundland and Labrador to 
grow by 1.5 per cent in 2013 and 1.4 per cent in 2014. 
"The ramping up of major projects, including Muskrat Falls hydroelectric 
project and Hebron offshore oil field, is expected to support modest 
employment growth and could create favourable conditions for the return of 
skilled labour to the province," added Wright. 
Uncertain conditions in the commodities markets weighed on mining activity in 
Newfoundland and Labrador during the first half of the year, though any 
adverse impact on prospects for large scale projects has been muted. Prices 
for iron ore have drifted higher more recently and are expected to sustain 
historically elevated levels meanwhile boosting production volumes, RBC says. 
The completion of the Long Harbour nickel processing facility and a subsequent 
ramp up of production will augment production at the Direct Shipping iron ore 
project and Iron Ore Company of Canada's phase two expansion in 2014. 
Nova Scotia's economy remains poised for a recovery this year, though growth 
will be more modest than previously anticipated because of delays at the new 
Deep Panuke offshore natural gas facility and a hesitant pick-up in domestic 
activity. RBC has downwardly revised the province's real GDP growth to 1.2 per 
cent in 2013 from 1.7 per cent previously, with growth accelerating to 2.3 per 
cent in 2014. 
"The anticipated rebound in the natural gas sector is being pushed back as 
production of the Deep Panuke offshore facility is now expected to ramp up 
this fall, instead of the summer - this lowers our expectations for growth in 
Nova Scotia this year," said Wright. "Momentum in the province will accelerate 
in 2014, however, as production at the facility and other major projects 
across the province strengthen and trickle through the data." 
RBC notes that maintenance work at the Sable offshore facility alongside 
ongoing maturation related declines drove natural gas production down by 
nearly 50 per cent and international exports of the fuel down 88 per cent in 
the first seven months of 2013. Nominal exports, on the other hand, have 
weathered the storm, with year-to-date growth surpassing that of other 
provinces. 
With employment in the province down year-to-date in August, earlier 
indications of improving prospects for the labour market have faded. RBC 
expects fewer than 500 new jobs in the province in 2013, marking Nova Scotia's 
fifth consecutive year of employment growth that is less than 1.0 per cent. 
RBC anticipates an increase in offshore exploratory work next year, as British 
Petroleum joins Shell in seismic surveying of deepwater sites as a part of 
record high exploratory bids in 2011 and 2012. While Nova Scotia waits for the 
impact associated with the cutting of steel for the $25-billion, 30-year 
shipbuilding procurement contract, ongoing preparatory work at the Irving 
shipyard will provide a positive boost to economic activity, says RBC. 
Economic growth in Prince Edward Island hit a speed bump this year, RBC says. 
While the provincial economy is expected to shift into high gear in 2014, the 
anticipated drivers of economic growth will change, as external trade 
strengthens and the domestic economy slows. RBC forecasts real GDP growth 
easing to 1.2 per cent in 2013, with external trade supporting modest 
acceleration to 1.7 per cent in 2014. 
"Indicators of economic activity in PEI suggest the domestic economy hit a 
soft patch earlier this year, due to easing in labour market activity and 
cooling housing starts, and is expected to come under increased pressure as 
demographic challenges persist and fiscal restraints intensify," added Wright. 
"That said, we expect this dip in activity to occur amid offsetting pick-up in 
the export sectors after a sluggish start to 2013." 
RBC indicates that robust employment gains in PEI earlier in the year, have 
given way to weaker labour market activity, as public sector losses escalated 
this summer. Despite recent moderation, employment remains up 2.6 per cent on 
a year-over-year basis in August and is expected to be sustained by an uptick 
in private sector hiring before easing in 2014. 
Demographic challenges in PEI intensify, as population growth dipped to 
negative territory earlier this year. RBC says that net international 
migration dropped below zero in the first quarter for the first time in over a 
decade, while Islanders increasingly relocated to other provinces after 2012 
recorded the largest net outflow of migrants to other provinces in 43 years. 
After a brief pause earlier this year, exports are expected to take flight in 
2014 and offset PEI's weaker domestic economy. Potatoes, the Island's 
agricultural staple, are expected to support year-over-year export gains as a 
firmer market for the vegetable arises in the U.S. Export growth opportunities 
- such as a PEI operation winning a federal government contract in the 
aerospace industry and investments directed to expanding key provincial 
industries, for example fishing and wind power - suggest activity in these 
sectors will continue to carry PEI to modest growth this year and next, RBC 
says. 
The rising tide of economic activity in the U.S. this year is expected to lift 
New Brunswick's economy in 2013; however, RBC expects that the positive boost 
from exports will be tempered by setbacks in the energy sector and a flat 
labour market. RBC forecasts real GDP growth of just 0.8 per cent in 2013, as 
potentially game-changing projects in the province are not expected to impact 
economic activity in the near-term. 
RBC notes that nominal energy exports fell below year-ago levels, hurting the 
province's international trade balance. As refinery maintenance is expected to 
curb energy exports in the near-term, continued advances in other key exports 
will drive economic activity through 2014. Nominal exports of lumber increased 
solidly so far this year, and RBC says they will keep the momentum as U.S 
housing starts surge to a seven-year high in 2014. New Brunswick's economy 
will also benefit from additional gains in electricity exports as production 
issues at Point Lepreau are resolved. 
"In 2014, we expect New Brunswick's rate of growth to nearly double to 1.5 per 
cent from further improvements in the U.S. outlook," said Wright. 
The report notes that earlier gains in New Brunswick's employment data 
disappointingly gave way for further job losses over the summer. RBC expects 
the province's labour market to decline for the fourth consecutive year, 
easing marginally by 0.1 per cent overall in 2013. 
"Despite the setback in New Brunswick's employment picture this year, we 
remain confident that job prospects will improve in 2014, once the economy is 
on a more firm, upward track," added Wright. 
The RBC report notes retail sales rebounded in the first half of the year from 
the lows at 2012's end. Despite the rebound, however, retail sales continue to 
track below 2012 levels during most of the year to date, and RBC expects 
retail sales to grow at the slowest rate in the country both this year and 
next. 
Following a 20 per cent annual decline in 2012, non-residential building 
construction edged out its first quarterly gain in more than two years. 
Advancement of the $12 billion Energy East project is expected to spur a 
turnaround in confidence and capital investment in the province. 
The RBC Economics Provincial Outlook assesses the provinces according to 
economic growth, employment growth, unemployment rates, retail sales, housing 
starts and consumer price indices. The full report and provincial details are 
available online as of 8 a.m. ET today at 
rbc.com/economics/economic-reports/provincial-economic-forecasts.html.
 

SOURCE  RBC 
Craig Wright, RBC Economics Research, 416 974-7457 Laura Cooper, RBC Economics 
Research, 416 974-8593 Elyse Lalonde, Communications, RBC Capital Markets, 416 
842-5635 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/September2013/17/c7782.html 
CO: RBC
ST: Ontario
NI: FIN ECO  
-0- Sep/17/2013 09:00 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.