HALIFAX, NOVA SCOTIA--(Marketwired - Sept. 17, 2014) - Economic growth in Nova Scotia should improve over the next two years -- despite a number of headwinds. Many factors will lift provincial growth to 1.6 per cent this year and benefit Halifax -- according to a special report from BMO Economics released today, entitled Halifax: Sailing Toward Firmer Growth.
The BMO report notes that real GDP growth in Nova Scotia is expected to hit the 2 per cent mark in 2015, compared to 0.8 per cent in 2013. "The $25 billion contract to build combat ships for the Royal Canadian Navy should provide long-term economic support and the manufacturing sector will benefit from past weakness in the Canadian dollar and a U.S. economy that looks poised to expand at a solid 3 per cent clip through 2015," said Robert Kavcic, Senior Economist, BMO Capital Markets.
Halifax's diverse sector makeup, including education and finance, continues to look stable while offshore exploration from the likes of BP and Shell provides an encouraging growth avenue, according to the BMO report. However, Mr. Kavcic noted that skilled labour scarcity remains a pressing issue for Halifax, as Nova Scotia saw a net outward migration of more than 3,000 people, or 0.3 per cent of the underlying population, in the 12 months through the first quarter of 2014.
Employment in Halifax was down 1.4 per cent year over year in August and unchanged since the start of 2012, with the unemployment rate in Halifax at 5.8 per cent. "We expect employment growth in Halifax to strengthen through 2016, adding about 6,000 jobs as shipbuilding activity ramps up and businesses hire, pulling the unemployment rate down to around 5 per cent," added Stanley Julien, Vice President, Commercial Banking, Eastern Canada, BMO Bank of Montreal.
According to the BMO report, the Halifax housing market is experiencing a prolonged period of weakness, with existing home sales in the latest 12-month period close to 15-year lows, amid population declines and a soft labour market.
As a result, residential construction activity is unlikely to contribute much to local economic growth in the near future.
As for housing affordability, Mr. Kavcic noted that Halifax remains close to historically normal levels, with average prices in the city currently 3.3 times the median family income, among the lowest of Canada's major cities. The typical mortgage payment on an average-priced home comes in at just over 20 per cent of estimated median family income, one of the most favourable affordability ratios in the country.
The complete BMO report is available 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 more than $586 billion in total assets and approximately 47,000 employees at July 31, 2014.
About BMO Financial Group in Atlantic Canada
BMO Bank of Montreal operates 85 branches in Atlantic Canada. BMO Financial Group also serves clients in Atlantic Canada through 15 BMO Nesbitt Burns branches and three BMO Harris Private Banking offices.
