Unemployment Rate for Newfoundland and Labrador To Fall, Says BMO Economics

ST. JOHN’S, February 15, 2008 – The unemployment rate for Newfoundland and Labrador over the next two years will drop below last year’s level, according to a provincial economics outlook released today by BMO Financial Group.

The report forecasts an unemployment rate of 13.1 per cent in 2008 and 2009 compared to 13.6 per cent last year. The good news stems from strong economic growth in 2007, although that is expected to drop off this year.

“Newfoundland and Labrador led the country in economic growth last year, with output rising 5.9 per cent amid a rebound in offshore drilling and mining activity,” said Doug Porter, Chief Economist, BMO Capital Markets. Mr. Porter said that higher production at oil projects led to a consumer spending spree, although that should soften as production drops off at Hibernia, Terra Nova and White Rose.

Highlights of the report include:

• Growth will moderate to a below-average 1.2 per cent in 2008, but will rise back up to 1.8 per cent in 2009.
• In an interesting twist, after shedding people for nearly two decades, net in-migration was more than 1,000 people in the third quarter last year – the first net inflow since 1990, and the largest since 1971.
• Newfoundland & Labrador lifted its surplus estimate to $882 million in fiscal 2007/2008, as strong output from the offshore oil sector continues to boost revenues.

The complete report can be found at www.bmocm.com/economics.

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Media Contact:

Lucie Gosselin, Montreal, lucie.gosselin@bmo.com, (514) 877-8224