April 5, 2010
Economic Snapshot
Alberta’s economy has become more energized
JOHN CLINKARD
consulting economist, CanaData
Given that Alberta’s unemployment rate (6.9%) is less than half a percentage point below the 14-year high that it reached in August 2009, and total employment in the province is almost one percent lower than it was 12 months ago, the Wild Rose Province is still in dire straits.
Having said this, there are clear signs that the province is gradually emerging from its most severe downturn since 1982.
First, although unemployment is still high, the jobless rate has been trending erratically lower over the past six months. Also, while total employment is still contracting on a year-over-year basis, a number of key sectors are showing signs of strength. Specifically, in February, year-over-year employment in health services was up by 12.1%, followed by education services (+7.8%), information services (+7.7%) and business services (+5.5%).
This improvement in the health of the labour market has clearly given a boost to consumer confidence and not surprisingly to retail sales, which in the past three months have increased by 2%, faster than all but two of the ten provinces.
Looking ahead, the recent uptrend in commodity prices and improving prospects for global energy demand have caused firms in Alberta’s oil and gas extraction industry to increase their planned spending by over 8% to $25.5 billion in 2010, following a 41% drop to $17 billion in 2009.
Major projects that will contribute to this increase include the restart of Suncor’s expansion of its Firebag in situ oil sands project and Husky Energy’s Sunrise Oil Sands Project northeast of Fort McMurray, Alberta.
This pickup in investment should, as it has in the past, lead to a further strengthening of employment in construction and mining and help to stem the net outflow of inter-provincial migrants that escalated sharply in the third quarter of 2009. Stronger population growth, together with low interest rates and strengthening confidence, should also help to reinforce housing demand into 2011.
Following a decline of 2.5% in 2009, growth in Alberta should average 3.1% in 2010 and remain in this vicinity in 2011.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Data source (actuals): Statistics Canada. Forecasts and chart: Reed Construction Data – CanaData.
