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Ontario’s economy to outperform national average: BMO
Higher U.S. demand, robust housing market helping growth.
Staff on October 7, 2016
Ontario’s economy is anticipated to outperform the national average for a third straight year in 2016 as it benefits from U.S. demand, a weaker loonie and a robust housing market, according to the BMO Blue Book released today by BMO Capital Markets Economics and BMO Commercial Banking.
Much like the U.S. Federal Reserve’s Beige Book, the BMO Blue Book combines the expertise of BMO’s economists with information on current national and provincial business conditions provided to BMO’s commercial bankers by local businesspeople.
“Real GDP is on track to expand 2.6% this year, and a still-solid 2.3% in 2017. Firm U.S. demand, a weaker currency, low oil prices and a strong housing market are all at work,” said Robert Kavcic, Senior Economist, BMO Capital Markets.
Exports and manufacturing have been supported by the macroeconomic backdrop. “Real exports have risen above previous record levels seen before the recession in 2007, and the real trade balance is steadily improving, adding to economic growth. However, longer-term issues remain as relatively high labour costs continue to pose challenges for the auto sector versus Mexico and the Southern U.S.,” stated Kavcic. “Indeed, while manufacturing has rebounded strongly earlier in the recovery, growth has softened in the past two years as firms have filled up production capacity, but have been shy to deploy new capital investment and hiring.”
Meanwhile, Ontario’s labour market is thriving, with employment up 1 per cent year-over-year through August.
Ontario’s economy to outperform national average: BMO
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