Slide in oil prices continues to impact Alberta economy
The slide in oil prices continues to significantly impact Alberta’s economy with real GDP expected to contract one per cent in 2015, according to the Provincial Monitor report by BMO Capital Markets.
“That would be down from steady four per cent-plus growth over the prior five years, a period in which the province stood head and shoulders above the rest of the country,” said the report by senior economist Robert Kavcic. “By 2016, growth should improve, but remain subdued at 1.5 per cent, assuming a slow upward grind in WTI (West Texas Intermediate) oil prices.”
Last week, WTI slid to under US$41 per barrel.
“The energy sector directly accounts for roughly 25 per cent of Alberta GDP, seven per cent of employment and almost two-thirds or private non-housing capital spending. As a result, the drop in prices looks like it will cut more than (three percentage points) from provincial growth this year, largely through lower capital spending,” wrote Kavcic in the report. “Oilsands production, however, is expected to hold up better given that much of the cost of long-life projects is sunk up front. Indeed, total oil production continued to run above year-ago levels through July despite some temporary outages.
“The labour market is weakening, with the unemployment rate rising to a five-year high of 6.6 per cent in October, above that in neighbouring B.C. for the first time in 21 years. However, the employment performance depends largely on the survey used. According to the Labour Force Survey, the province is still performing well on a relative basis, despite its economic challenges. However, the payroll survey has Alberta at the bottom of the pack as of August, down a massive 2.6 per cent year-over year.”
The BMO report is forecasting overall employment growth in the province to drop from 2.2 per cent in 2014 to 1.4 per cent in 2015 and 0.3 per cent in 2016. It is forecasting the unemployment rate to climb from 4.7 per cent in 2014 to 5.9 per cent this year and to 6.8 per cent in 2016.
The report said interprovincial migration flows to the province have softened by about 25 per cent from their 2013 high, and should cool further as relative economic prospects improve in other regions of the country.
“This will continue to weigh on Alberta’s housing market, which is already grappling with a correction,” wrote Kavcic.
Housing starts in Alberta are expected to decline to 37,500 this year from 40,500 in 2014 and experience a further drop to 31,500 in 2016.
Slide in oil prices continues to impact Alberta economy | Calgary Herald
The slide in oil prices continues to significantly impact Alberta’s economy with real GDP expected to contract one per cent in 2015, according to the Provincial Monitor report by BMO Capital Markets.
“That would be down from steady four per cent-plus growth over the prior five years, a period in which the province stood head and shoulders above the rest of the country,” said the report by senior economist Robert Kavcic. “By 2016, growth should improve, but remain subdued at 1.5 per cent, assuming a slow upward grind in WTI (West Texas Intermediate) oil prices.”
Last week, WTI slid to under US$41 per barrel.
“The energy sector directly accounts for roughly 25 per cent of Alberta GDP, seven per cent of employment and almost two-thirds or private non-housing capital spending. As a result, the drop in prices looks like it will cut more than (three percentage points) from provincial growth this year, largely through lower capital spending,” wrote Kavcic in the report. “Oilsands production, however, is expected to hold up better given that much of the cost of long-life projects is sunk up front. Indeed, total oil production continued to run above year-ago levels through July despite some temporary outages.
“The labour market is weakening, with the unemployment rate rising to a five-year high of 6.6 per cent in October, above that in neighbouring B.C. for the first time in 21 years. However, the employment performance depends largely on the survey used. According to the Labour Force Survey, the province is still performing well on a relative basis, despite its economic challenges. However, the payroll survey has Alberta at the bottom of the pack as of August, down a massive 2.6 per cent year-over year.”
The BMO report is forecasting overall employment growth in the province to drop from 2.2 per cent in 2014 to 1.4 per cent in 2015 and 0.3 per cent in 2016. It is forecasting the unemployment rate to climb from 4.7 per cent in 2014 to 5.9 per cent this year and to 6.8 per cent in 2016.
The report said interprovincial migration flows to the province have softened by about 25 per cent from their 2013 high, and should cool further as relative economic prospects improve in other regions of the country.
“This will continue to weigh on Alberta’s housing market, which is already grappling with a correction,” wrote Kavcic.
Housing starts in Alberta are expected to decline to 37,500 this year from 40,500 in 2014 and experience a further drop to 31,500 in 2016.
Slide in oil prices continues to impact Alberta economy | Calgary Herald
