FREDERICTON, NEW BRUNSWICK--(Marketwire - May 3, 2012) - Mining output in New Brunswick will get a boost with new potash production at Potash Corp's $1.7 billion Sussex mine development, according to the Provincial Monitor report released today by BMO Economics. However, economic growth remains weak as a result of labour market struggles, cooling investment activity and waning stimulus spending. Real GDP was little changed in 2011, and growth should remain sluggish at 1.5 per cent in 2012.
"Some major private-sector capital projects are set to wind down later this year, including the Sussex mine development and the $1 billion Point Lepreau nuclear plant refurbishment," said Robert Kavcic, Economist, BMO Capital Markets.
Meantime, with U.S. growth still modest and the loonie near parity, exports and manufacturing should continue to face headwinds. "Exports jumped 17 per cent in 2011, largely reflecting higher prices received for energy and mineral products," noted Mr. Kavcic.
"While the new potash production is welcome news, the majority of businesses continue their efforts to adapt to the economic environment and make critical investments in their operations to improve productivity," said John Duff, Commercial Area Manager, New Brunswick and PEI, BMO Bank of Montreal. "Our exporters continue to face some challenges given our traditionally strong ties to the U.S. economy, however many have approached the challenge as an opportunity to rethink their supply chains and diversify their export markets."
Total employment is now 4.2 per cent below the peak level seen in late 2009, with broad-based declines in construction, manufacturing and many services industries. As a result, the jobless rate continues to trend higher, hitting 10.2 per cent in March, and migration flows have turned negative again-this will likely persist as better job prospects are found in Western Canada and, once shipbuilding commences, Nova Scotia.
The provincial government is projecting a $183 million budget deficit in fiscal 2012-2013, or 0.6 per cent of GDP, a significant improvement over the prior-year shortfall of $471 million. "The smaller deficit is in part to due the Federal Government's contribution to the Route One Gateway Project; excluding this $232 million revenue boost, the deficit would be a deeper $415 million but still better than the prior year total," stated Mr. Kavcic. "The province maintains that it will balance the books by fiscal 2014-2015, with this year's budget focused on continued expenditure control and only some minor revenue measures."
The full Provincial Monitor 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 North American financial services organization. With total assets of $538 billion as at January 31, 2012, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.