Calgary & Area Labour Market Report Annual 2011

Transcription

1 Calgary & Area Labour Market Report Annual 2011 Alberta Human Services

2 TABLE OF CONTENTS Introduction... 3 Organization of the Report... 3 Executive Summary... 4 The Economy... 9 Global and U.S. Economies... 9 Canadian Economy Alberta Economy Calgary Region Economy Trends in the Labour Market Canada Alberta Calgary Census Metropolitan Area (CMA) Calgary & Area Employer Survey Summary of 2011 Survey Results Job Bank Analysis Calgary (city) Communities Surrounding Calgary Banff/Canmore Area Appendix A Survey Methodology Appendix B Data Disclaimer Alberta Human Services has made every effort to ensure that the information contained in this report is reliable, but makes no guarantee of its accuracy or completeness. The user of any information in this report accepts full responsibility and risk of loss resulting from decisions made by the user. Alberta Human Services 2

3 INTRODUCTION Alberta Human Services provides career and labour market information products and resources, with both a provincial and local/regional focus, in order that Albertans have the skills, supports and information they need to succeed in the labour market. This report provides labour market information and analysis for use by Albertans in learning about the labour market and career planning; by employers and industry in understanding and addressing labour market issues; and by Alberta Human Services Calgary Region in strategic planning for programs and services. ORGANIZATION OF THE REPORT This report contains the following information: Economic Overview The Calgary regionʼs economy is influenced by global economic conditions, and by economic drivers in the Canadian economy and elsewhere in Alberta. This section provides information on economic activity in Trends in the Labour Market This section examines labour market information for Canada, Alberta and the Calgary Census Metropolitan Area (CMA) in Calgary & Area Employer Survey For each quarter of 2011, a survey was conducted of Calgary and area employers. The purpose of the survey was to gather information on recruitment and retention practices and various other employment issues employers in the region were facing. This section summarizes findings from surveys conducted in 2011 of 829 Calgary and area employers. Job Bank Analysis This section provides a summary of jobs posted to the Job Bank in Alberta Human Services 3

4 EXECUTIVE SUMMARY The Economy Global and U.S. Economies Several major events curtailed the global economic recovery in 2011 including the debt crisis in the Eurozone, the earthquake and tsunami in Japan and the slowdown in growth of emerging markets. These events, combined with volatile currency and commodity markets, resulted in a moderation of global economic growth. Global gross domestic product (GDP) growth decelerated to 3.8 per cent in 2011, following growth of 5.2 per cent the previous year. Growth in advanced economies slowed to 1.6 per cent in 2011, after advancing 3.2 per cent in Growth in emerging and developing economies also slowed to 6.2 per cent in 2011, following an increase of 7.3 per cent the previous year. The U.S. economy grew at a modest 1.7 per cent in 2011, following growth of 3.0 per cent in On the labour market front, employment in the U.S. increased by a net 1.64 million workers in 2011, resulting in the unemployment rate declining to 8.5 per cent, from 9.6 per cent in Canadian Economy Overall, the Canadian economy grew 2.5 per cent in 2011, following an increase of 3.2 per cent in All major industries with the exception of arts, entertainment and recreation posted positive growth rates in The Canadian dollar traded near parity against the US dollar for most of the year and averaged 99 cents US in The Canadian dollar is expected to average above parity over the next two years. Consumers in Canada paid on average 2.9 per cent more for goods and services as reflected in the allitems Consumer Price Index (CPI) in Inflation in Canada is expected to average 2.0 per cent in 2012 and 2.3 per cent in The Bank of Canada kept the overnight rate unchanged at 1.0 per cent throughout It is expected that the Bank of Canada will resume rate hikes once the economy regains its momentum. Major forecasting agencies and banks in Canada expect rate hikes to start as early as the second half of 2012 and continue through Canadaʼs population increased by 376,834 or 1.1 per cent year-over-year and reached million in Alberta Economy Although concerns regarding global and national economic momentum constrained Albertaʼs economic recovery somewhat, real GDP in Alberta was able to post a 3.1 per cent growth in With continued investment in the provinceʼs natural resources sector, Alberta is set to post above national average growth rates over the medium-term. The price of West Texas Intermediate (WTI) crude oil averaged $95 U.S. per barrel in 2011, up 20 per cent from an average of $79 U.S. per barrel in In contrast, natural gas prices declined for most of the year. The Alberta Natural Gas Reference Price (ARP) averaged $3.28 CAD per gigajoule (GJ) in 2011, down 8.0 per cent from an average of $3.57 CAD per GJ in Consumer prices in Alberta increased 2.4 per cent year-over-year in Alberta Human Services 4

5 After increasing 34 per cent in 2010, housing starts in Alberta declined 5.1 per cent year-over-year to 25,700 units in Overall, housing starts in Alberta are forecast to increase 13 per cent to 29,100 units in Positive net migration and increased employment in Alberta pushed the average apartment vacancy rate in the province down to 3.4 per cent in 2011, from 4.6 per cent in As a result, the average rent for a two-bedroom apartment rose slightly to $1,044 per month in 2011, from $1,036 per month the previous year. Retail sales in Alberta increased 7.0 per cent year-over-year and reached an estimated $64.1 billion in Wholesale sales in the province reached $71.3 billion in 2011, up 15 per cent from The average weekly earnings of Alberta payroll employees increased 4.7 per cent year-over-year to $1,040 in Alberta continued to have the highest average weekly earnings across all provinces in Canada throughout The average number of Albertans receiving regular Employment Insurance (EI) benefits declined 45 per cent year-over-year to 34,459 in Albertaʼs population increased by 75,787 or 2.0 per cent year-over-year and reached an estimated 3.82 million in Calgary Region Economy After a record decline of 4.7 per cent in 2009, Calgaryʼs economy continued to grow in 2011 and posted a real GDP growth of 2.5 per cent. This followed a 2.9 per cent increase in Calgaryʼs economy is set to continue to create jobs and grow 4.3 per cent on average annually over the next four years. Consumer prices in the Calgary CMA rose 2.2 per cent in 2011, following a modest 0.8 per cent gain in Calgaryʼs inflation rate is forecast to increase 1.9 per cent in 2012 and 2.3 per cent in Housing starts in the Calgary CMA reached 9,292 units in 2011, essentially unchanged from The Conference Board of Canada expects total housing starts in the Calgary CMA to reach 9,450 units in 2012 and just over 10,100 units in The main support for the overall gain over the medium-term is expected to come from increased activity in the multi-family market. The apartment vacancy rate in the Calgary CMA declined to 1.9 per cent in 2011, from 3.6 per cent in The average rent for a two-bedroom apartment in the Calgary CMA increased 1.8 per cent to $1,084 per month in 2011, from $1,069 per month in Total investment in non-residential building construction in the Calgary CMA declined 18 per cent yearover-year to $3.27 billion in With this level of investment, Calgary ranked third in terms of total investment in non-residential building construction among major metropolitan areas in Canada in 2011, behind Toronto ($8.02 billion) and Montreal ($3.52 billion). In 2011, Calgaryʼs downtown office market absorbed 2.4 million square feet of space, resulting in the downtown vacancy rate dropping to 4.5 per cent at year-end 2011, from 10.4 per cent in the final quarter of With no new major supply of downtown office space planned until late 2014, the downtown office space vacancy rate is forecast to fall to 3.0 per cent by year-end Calgaryʼs population reached an estimated 1,090,936 in This represented an increase of 19,421 residents or 1.8 per cent from Alberta Human Services 5

6 Trends in the Labour Market Canada Employment in Canada increased by 265,200 or 1.6 per cent in With the exception of New Brunswick, all provinces contributed to Canadaʼs employment gain in Employment growth in Canada is forecast to moderate, from 1.6 per cent in 2011, to 0.8 per cent in Employment in Canada is then forecast to increase 1.1 per cent in Canadaʼs unemployment rate averaged 7.4 per cent in 2011, down from 8.0 per cent in TD Economics is forecasting Canadaʼs unemployment rate will hover around 7.5 per cent over the next two years. Full-time employment in Canada rose by 1.9 per cent in 2011, accounting for nearly all of the jobs created in the year. The number of part-time jobs increased slightly by 0.2 per cent in The number of self-employed Canadians was relatively unchanged in 2011, while paid employment rose by 1.8 per cent. Employment for men increased close to 2.0 per cent in 2011, almost double the rate of growth experienced by women in Canada. Youth employment managed a 0.8 per cent gain in 2011, after declining by close to 1.0 per cent in Employment for core-aged Canadians (25 54 years) increased 1.0 per cent in 2011, while employment for those aged rose 3.7 per cent. Employment for Canadian seniors age 65+ increased by 7.5 per cent in The services-producing industries in Canada accounted for three-quarters of the net job gains in 2011, increasing by 1.5 per cent. Employment in the goods-producing industries in Canada rose by 1.7 per cent in Alberta Following a slight decline in employment in 2010, employment in Alberta increased by an impressive 77,500 or 3.8 per cent in 2011, more than double the national growth rate of 1.6 per cent. While all regions in the province recorded employment increases in 2011, almost 80 per cent of the new jobs were created in Edmonton and Calgary. Albertaʼs unemployment rate declined by a full percentage point year-over-year, from 6.5 per cent in 2010 to 5.5 per cent in Full-time employment in Alberta accounted for almost all of the employment gain in 2011, increasing by 4.5 per cent. Part-time employment in Alberta increased slightly by 0.7 per cent in The private sector clearly drove Alberta's impressive employment growth in 2011, increasing by 6.5 per cent. Public sector employment, however, declined by 4.5 per cent over the same period. The number of self-employed persons in Alberta increased by 8,600 or 2.5 per cent in Both men and women in Alberta experienced strong employment growth in 2011, with employment for men increasing 4.2 per cent and employment for women increasing 3.4 per cent. All of the major age groups in Alberta experienced employment gains in 2011, though the gains were much more significant for older workers. Employment for Alberta seniors age 65+ increased by 11,700 or 21 per cent in 2011, after remaining unchanged in Goods-producing industries led employment growth in Alberta in 2011, increasing by 6.4 per cent. Employment in Albertaʼs services-producing industries rose by close to 3.0 per cent in 2011, led by healthy growth in the professional, scientific and technical services, other services, and trade industries. Alberta Human Services 6

7 Calgary CMA Total employment in the Calgary CMA rose 2.9 per cent to 725,500 in 2011, an increase of 20,700 from Calgaryʼs unemployment rate fell a full percentage point year-over-year, from 6.8 per cent in 2010 to 5.8 per cent in Calgaryʼs participation rate the percentage of the population aged 15 years and over that is either employed or actively looking for employment stood at 74.5 per cent in 2011, down 0.1 per cent from Both goods-producing and services-producing industries in the Calgary CMA benefitted from increased oilsands investment in Employment in the mining and oil and gas industry increased 8.2 per cent in 2011, while manufacturing employment rose close to 5.0 per cent. Calgaryʼs professional, scientific and technical services industry had the highest employment growth rate among services-producing industries in 2011 at 10.7 per cent. Employment growth was also strong in trade, health care and social assistance, and accommodation and food services. Calgary and Area Employer Survey For each quarter of 2011, a survey was conducted of Calgary and area employers. The purpose of the survey was to gather information on recruitment and retention practices and various other employment issues employers in the region were facing Survey Results Overall in 2011, the 829 companies surveyed employed just over 93,000 employees. More companies expanded than downsized in the year prior to their survey, a reversal of the 2009 and 2010 results. Over one-quarter of the companies surveyed in 2011 anticipated a business expansion in the following year. Seven per cent of the companies reported they had laid off approximately 385 employees in the three months prior to their survey. Fifty-one per cent of the companies had approximately 3,045 vacant positions that need to be filled, up from 42 per cent in Overall, the top vacant positions in 2011 were truck drivers, food and beverage servers, landscaping and grounds maintenance labourers, security guards, and financial auditors and accountants. On balance, 21 per cent of the companies anticipated employment would increase in the three months following their survey. Nineteen per cent of the companies surveyed in 2011 reported they employed approximately 1,230 temporary foreign workers, up slightly from the previous two years. Eight per cent of the companies anticipated hiring temporary foreign workers in the year following their survey. Overall, the most commonly used recruitment method was word of mouth/employee referrals, followed by walk-ins/unsolicited resumes, Internet, company website/internal postings, and newspapers. Forty-four per cent of the companies had difficulty recruiting qualified employees in 2011, up from 29 per cent in On balance, 11 per cent of the companies anticipated having more difficulty recruiting qualified employees in the year following their survey. Alberta Human Services 7

8 Sixty-five per cent of the companies surveyed in 2011 reported a total of 7,300 employees left their companies in the 12 months prior to their survey as a result of voluntary turnover. This equated to a turnover rate of eight per cent, up from five per cent the previous two years. Four per cent of the companies on balance anticipated voluntary turnover would be lower in the 12 months following their survey. The most commonly used retention strategy for companies surveyed in 2011 was a positive work environment, followed by competitive salary, learning/growth opportunities, excellent management/supervision, and interesting/challenging work. More than one-quarter of the companies on balance anticipated they would be focusing more on employee retention in the following year. Recruitment and availability of qualified labour was the top response, mentioned by just over one-third of the companies, followed by employee retention, reported by approximately 10 per cent of the companies. Job Bank Analysis For Calgary (city), there were a total of 123,887 job positions listed on the Job Bank in 2011, up 27 per cent from Sales and service occupations accounted for 36 per cent of the total positions in 2011, while trades, transport and equipment operator occupations accounted for another 28 per cent. A total of 22,220 job positions were listed on the Job Bank in 2011 for the communities surrounding Calgary, up 22 per cent from Sales and service occupations accounted for 39 per cent of the total positions in 2011, while trades, transport and equipment operator occupations accounted for another 28 per cent. For the Banff/Canmore area, there were 10,767 job positions listed on the Job Bank in This represented an 18 per cent increase from Sales and service occupations accounted for 82 per cent of the total positions in 2011, while occupations in art, culture, recreation and sport represented an additional 5 per cent of the positions. In 2011, job postings for Calgary and the communities surrounding Calgary varied from a low of 1,570 postings the week of January 12, 2011 to a high of 3,511 postings the week of September 27, Job postings for the Banff/Canmore area varied from a low of 97 postings the week of January 12, 2011 to a high of 272 postings the week of August 31, Alberta Human Services 8

9 THE ECONOMY An overview is provided in this section of global economic conditions, economic drivers in the national economy and in the provincial economy, and economic activity in the Calgary region in GLOBAL AND U.S. ECONOMIES Several major events curtailed the global economic recovery in 2011 including the debt crisis in the Eurozone, the earthquake and tsunami in Japan that disrupted global supply chains, the slowdown in growth of emerging markets, and the downgrade of U.S. Treasury securities. These events, combined with volatile currency and commodity markets, resulted in a moderation of global economic growth. In 2011, global gross domestic product (GDP) growth decelerated to 3.8 per cent, following growth of 5.2 per cent in Figure 1: World Gross Domestic Product (GDP) Growth Forecast f 2013f 8.0% 7.3% 7.0% Per cent Change 6.0% 5.0% 4.0% 3.0% 5.2% 3.8% 3.9% 3.3% 3.2% 6.2% 5.9% 5.4% 2.0% 1.0% 1.9% 1.6% 1.2% 0.0% World Advanced Economies Emerging and Developing Economies Source: International Monetary Fund, World Economic Outlook Report January 2012 Update Growth in advanced economies slowed to 1.6 per cent in 2011, after advancing 3.2 per cent in Among the major advanced economies 2, Germany had the highest GDP growth rate in 2011 at 3.0 per cent, followed by Canada (+2.5 per cent) and the U.S. (+1.7 per cent). Japan was the only major advanced economy to contract in 2011 (-0.9 per cent). The International Monetary Fund (IMF) is forecasting growth of advanced economies will further decelerate to 1.2 per cent in 2012, reflecting heightened uncertainty that has weakened consumer and business confidence. 1 2 International Monetary Fund, World Economic Outlook Report, January 2012 Update. Defined as: Canada, France, Germany, Italy, Japan, Spain, United Kingdom, United States. Alberta Human Services 9

10 Growth in emerging and developing economies also slowed to 6.2 per cent in 2011, following an increase of 7.3 per cent in China and India continued to lead growth in 2011, with output advancing 9.2 per cent and 6.4 per cent respectively. The IMF is forecasting growth in emerging and developing economies will further slow to 5.4 per cent in The U.S. economy grew at a modest 1.7 per cent in 2011, following growth of 3.0 per cent in This was mainly due to positive contributions from exports, nonresidential investment and personal consumption expenditures. Decreased government spending and an increase in imports, which are counted against the calculation of GDP, partially offset the gains. 3 On the labour market front, employment in the U.S. increased by a net 1.64 million workers in Private sector employers in the U.S. added 1.92 million workers, which was offset by 280,000 job losses in the public sector. As a result, the unemployment rate in the U.S. declined to 8.5 per cent in 2011, from 9.6 per cent the previous year. 4 Job growth was led by the professional and business sector, which added 452,000 net new jobs in 2011, followed by education and health services, leisure and hospitality, and retail trade. U.S. manufacturers added 225,000 net new jobs in 2011, led by gains in transportation equipment, fabricated metals and machinery. According to the U.S. Economics & Statistics Administration, this represented the strongest job gains for the sector since High oil prices supported job growth in mining and oil and gas extraction in 2011, with employment in the mining and logging sector up 12 per cent year-over-year. Job losses were experienced in the information and government sectors in Public sector employment losses were mainly in local schools and local and state government administration. The U.S. postal service shed over 30,000 jobs in Figure 2: U.S. Employment: Net New Jobs Created by Industry in 2011 Professional & business services Education & health services 452, ,000 Leisure & hospitality Retail trade Manufacturing 268, , ,000 Mining & logging Wholesale trade Transportation & warehousing Construction Other services Financial activities 91,000 84,000 67,000 46,000 44,000 7,000 Information -36,000 Government -280, , , , , ,000 Jobs Source: U.S. Bureau of Labour Statistics U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts Gross Domestic Product, 4 th quarter 2011 and annual 2011 (second estimate), February 29, U.S. Department of Commerce, Economics & Statistics Administration, Economic Indicator 2011 Employment Review: Which Jobs Grew in 2011; Next Steps for 2012, March 23, Ibid. Alberta Human Services 10

11 Despite the decline in the U.S unemployment rate in 2011, there were still more than 13 million unemployed persons looking for work at the end of the year, and several million more that have become discouraged and given up the search. The number of long-term unemployed persons (those jobless for 27 weeks or more) still accounted for close to half of the total unemployed in the U.S. in December The average duration of unemployment in the U.S. stood at 40.8 weeks at the end of the year 6, more than double the average duration of unemployment in Canada (19.6 weeks). CANADIAN ECONOMY Overall, the Canadian economy grew 2.5 per cent in 2011, following an increase of 3.2 per cent in major industries with the exception of arts, entertainment and recreation posted positive growth rates in All The goods-producing sector increased its production 3.6 per cent in 2011 from a year earlier. Within this sector, the main growth industries were mining, oil and gas extraction and construction. Production of the mining, oil and gas extraction industry was up 4.5 per cent year-over-year in 2011, despite the declines registered in the second quarter of the year due to wildfires in Northern Alberta. The construction industry also posted a 4.1 per cent increase, mostly supported by gains in the residential market and repair work. Manufacturing output increased 2.4 per cent in 2011, which was the second consecutive yearly gain for the industry following four years of declines. The output of the services-producing sector grew 2.2 per cent on an annual basis in 2011, with wholesale trade, transportation and warehousing, and the public sector (education, health services and public administration) posting the largest gains. Both wholesale trade (+3.2 per cent) and retail trade (+1.6 per cent) increased in Production of the arts, entertainment and recreation sector declined 1.2 per cent in According to Statistics Canada, this was mostly due to a return to more normal levels of activity following the Vancouver 2010 Olympic and Paralympic Winter Games. 8 The key drivers of the Canadian economy are summarized below. Canadian Dollar: The Canadian dollar traded near parity against the US dollar for most of the year and averaged 99 cents US in This was up 2.0 per cent from an average of 97 cents US recorded in Due to increased global economic uncertainty and the debt crisis in Europe, many investors moved back to the US dollar for refuge. This caused the Canadian dollar to depreciate in late September 2011 and trade below parity for the rest of the year. However, the value of the Canadian dollar against the US dollar has been very stable throughout the year, trading in a range between 97 cents US and 104 cents US. It is expected that uncertainties in the global financial markets will moderate over time, causing the Canadian dollar to regain its strength against the US dollar. The Canadian dollar is expected to average above parity over the next two years. Inflation: Consumers in Canada paid on average 2.9 per cent more for goods and services as reflected in the all-items Consumer Price Index (CPI) in This followed an increase of 1.8 per cent in 2010 and 0.3 per cent in 2009, and was slightly higher compared to annual averages United States Department of Labour, Bureau of Labour Statistics, Table A-12. Unemployed persons by duration of unemployment, Updated March 9, Statistics Canada, Gross Domestic Product by Industry December 2011, Catalogue No X Ibid. Bank of Canada, Alberta Human Services 11

12 recorded in the early 2000s. 10 The acceleration in the pace of inflation in 2011 was mainly a result of higher gasoline and food prices. Gasoline prices increased 20 per cent in 2011, posting the largest increase recorded in a decade. Food prices were up 3.7 per cent over the same period. The Bank of Canadaʼs core index, which excludes eight of the CPIʼs most volatile components (fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation and tobacco products), increased 1.6 per cent in 2011, after increasing 1.8 per cent in According to Statistics Canada, this was the smallest annual average increase in the Core CPI since The factors that fuelled the inflation rate in 2011 are not expected to persist through The rise in energy prices is expected to slow and more moderate economic growth is expected to keep inflation in Canada within the Bank of Canadaʼs inflation target range. The all-items CPI in Canada is expected to rise 2.0 per cent in 2012 and 2.3 per cent in Interest Rates: Supported by the economic recovery of the Canadian economy, the Bank of Canada was the first member of the G7 group of industrialized countries to start interest rate hikes in The Bank of Canada increased the overnight rate 13 by 75 basis points to 1.0 per cent between June and September However, reflecting the slowdown in the pace of economic growth, the Bank of Canada kept the overnight rate unchanged at 1.0 per cent throughout With the overnight target rate remaining close to historical lows and inflation contained within the target rate, there is enough stimulus to support growth in the Canadian economy. It is expected that the Bank of Canada will resume rate hikes once the economy regains its momentum. Major forecasting agencies and banks in Canada expect rate hikes to start as early as the second half of 2012 and continue through Population: Canadaʼs population increased by 376,834 or 1.1 per cent year-over-year and reached million in Net international migration was estimated at 243,659 and accounted for 65 per cent of Canadaʼs population growth in Natural increase (births minus deaths) was estimated at 133,175 in 2011, down slightly from 136,440 in ALBERTA ECONOMY Although concerns regarding global and national economic momentum constrained Albertaʼs economic recovery somewhat, real GDP in Alberta was able to post a 3.1 per cent growth in This was mainly a result of continued energy related investments in the province, which followed a 3.4 per cent growth recorded the previous year. While the impacts of energy investments were mainly visible in the construction industry, the positive spillovers extended far beyond the construction sector. Employment increased 3.8 per cent year-over-year, pushing the unemployment rate down a full percentage point from 6.5 per cent in 2010 to 5.5 per cent in With continued investment in the provinceʼs natural resources sector, Alberta is set to post above national average growth rates over the medium-term Statistics Canada, The Consumer Price Index December 2011, Catalogue No X. Ibid. Conference Board of Canada. Economic Forecast, Canadian Outlook Autumn 2011, p.37. The overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or "overnight") funds among themselves. When the Bank of Canada changes the Target for the Overnight Rate, this change usually affects other interest rates, including mortgage rates and prime rates charged by commercial banks. Statistics Canada, Quarterly Demographic Estimates, October to December 2011, Catalogue no X, March Alberta Human Services 12

13 The key drivers of the Alberta economy are summarized below. Energy Industry: As political unrest in the Middle East during the first half of the year escalated supply shortages in an already tight market, 2011 marked the highest crude oil prices seen since the historical highs recorded in The price of West Texas Intermediate (WTI) crude oil averaged $95 U.S. per barrel in 2011, up 20 per cent from an average of $79 U.S. per barrel in The U.S. Energy Information Administration is forecasting WTI crude oil will average $100 U.S. per barrel in 2012, and reach $106 U.S. per barrel by the end of In contrast, natural gas prices declined for most of the year. The Alberta Natural Gas Reference Price (ARP) averaged $3.28 CAD per gigajoule (GJ) in 2011, down 8.0 per cent from an average of $3.57 CAD per GJ in AJM Deloitte is forecasting the ARP will average $3.25 CAD per MCF 18 in 2012 and $3.50 CAD per MCF in Following a significant increase recorded in 2010, the average number of active drilling rigs in Alberta increased by a further 38 per cent year-over-year to 286 active rigs in The rig utilization rate in Alberta, defined as the share of active rigs in all available rigs, reached 51 per cent in 2011, up from 37 per cent the previous year. Inflation: Consumer prices in Alberta, as measured by the all-items Consumer Price Index (CPI), increased 2.4 per cent year-over-year in While consumer prices grew at a faster rate in all provinces in 2011, Alberta and British Columbia posted the smallest increases. 21 The main upward pressure to Albertaʼs CPI increase came from energy prices, which were up 22 per cent from the previous year. Food prices in the province also increased 4.6 per cent on an annual basis. Excluding the cost of food and energy, the all-items CPI in Alberta posted a year-over-year increase of 0.6 per cent in According to RBC Economics, Alberta is forecast to have the lowest inflation rate in 2012 at 1.5 per cent (along with BC and QC), and the second lowest inflation rate in 2013 at 2.0 per cent (after BC). Housing Market: After increasing 34 per cent in 2010, housing starts in Alberta declined 5.1 per cent year-over-year to 25,700 units in While multi-family starts posted an increase of 14 per cent, this was not enough to offset a 15 per cent decline in the single-detached market. Overall, housing starts in Alberta are forecast to increase 13 per cent to 29,100 units in One of the main factors affecting housing starts in the province in 2011 was the competition from an increased number of units from the resale market. The number of existing homes sold in Alberta as reported by the Multiple Listing Service (MLS) increased 6.9 per cent on an annual basis to 53,146 sales in The average MLS resale price in Alberta increased 1.0 per cent to $355,800 in The Canada Mortgage and Housing Corporation (CMHC) is forecasting MLS sales to increase 2.8 per cent in 2012 to 53,145 units and the average MLS resale price to increase 2.2 per cent to $363,650 during the same time period U.S. Energy Information Administration, Short Term Energy Outlook, January Alberta Energy, Monthly Reference Price Calculation, 1MCF = 1.05 GJ AJM Deloitte, Gas Forecast, December 31, Government of Alberta, Monthly Economic Review, February 2012, p.8. Statistics Canada, The Consumer Price Index December 2011, Catalogue No X. Government of Alberta, Monthly Economic Review, February 2012, p.11. Canada Mortgage and Housing Corporation, Housing Market Outlook, Prairie Region Highlights, First Quarter 2012, p.6. Ibid. lbid. Alberta Human Services 13

14 Positive net migration and increased employment in Alberta pushed the average apartment vacancy rate in the province down to 3.4 per cent in 2011, from 4.6 per cent in As a result, the average rent for a two-bedroom apartment rose slightly to $1,044 per month in 2011, from $1,036 per month the previous year. 26 Retail and Wholesale Sales: Retail sales in Alberta increased 7.0 per cent year-over-year and reached an estimated $64.1 billion in This rate of growth in retail sales was almost double the national average of 3.6 per cent and was the second fastest across all provinces in Canada, just behind Saskatchewan (+8.4 per cent). 27 Wholesale sales in the province reached $71.3 billion in 2011, up 15 per cent from While the growth in wholesale trade was also double the national average of 7.4 per cent, Alberta ranked fourth among all provinces in terms of the annual growth rate. 28 Building Permits: The value of building permits issued in Alberta totaled $12.7 billion in 2011 ($7.0 billion were residential, $5.7 billion were non-residential), up 11 per cent from The main driver of this increase was a 20 per cent growth recorded in the non-residential sector. Within the nonresidential sector, while the value of institutional/governmental building permits was down 19 per cent, this decline was more than offset by a 30 per cent increase in commercial building permits and a 22 per cent increase in industrial building permits. 29 Average Weekly Earnings: The average weekly earnings of Alberta payroll employees increased 4.7 per cent year-over-year to $1,040 in This followed a 4.5 per cent gain in Throughout 2011, Alberta continued to have the highest average weekly earnings across all provinces in Canada. Employment Insurance: The average number of Albertans receiving regular Employment Insurance (EI) benefits declined 45 per cent year-over-year to 34,459 in Regular EI beneficiaries in Alberta declined steadily throughout the year, from a high of 44,120 in January 2011 to a low of 28,750 in November Population: Albertaʼs population increased by 75,787 or 2.0 per cent in 2011, compared to the previous year. Natural increase (birth minus deaths) was estimated at 30,748 and accounted for 40 per cent of Albertaʼs annual population growth. Net international migration was estimated at 25,898 in 2011, accounting for 34 per cent of the provinceʼs growth, while net interprovincial migration, estimated at 19,141, accounted for the remaining growth. 31 CALGARY REGION ECONOMY After a record decline of 4.7 per cent in 2009, Calgaryʼs economy continued to grow in 2011 and posted a real GDP growth of 2.5 per cent. This followed a 2.9 per cent increase in While economic growth was higher in 2010, the local economy started creating jobs in an important factor for a sustainable long-term economic growth. Employment in the Calgary Census Metropolitan Area (CMA) increased by almost 3.0 per cent year-over-year and reached an estimated 725,500 in Consequently, the unemployment rate declined from 6.8 per cent in 2010 to 5.9 per cent in Canada Mortgage and Housing Corporation, Rental Market Report Alberta Highlights, Fall Statistics Canada, Retail Trade December 2011, Publication No: X. Statistics Canada, Wholesale Trade December 2011, Publication No: X. Government of Alberta, Monthly Economic Review, February 2012, p.6. Ibid, p.18. Statistics Canada, Quarterly Demographic Estimates, October to December 2011, Catalogue no X, March Conference Board of Canada, Metropolitan Outlook 1 Winter 2012, p. 4. Alberta Human Services 14

15 While economic growth in 2011 was low compared to historical averages, with continued energy related investment, Calgaryʼs economy is set to continue to create jobs and grow 4.3 per cent on average annually over the next four years. This pace of growth will once again place Calgary in first place in terms of real GDP growth among Canadaʼs major urban centers. 33 The key contributory influences on the Calgary region economy are described below. Inflation: Consumer prices in the Calgary CMA rose 2.2 per cent in 2011, following a modest 0.8 per cent gain in Despite the increase in the pace of inflation, the Calgary CMA posted the second smallest annual inflation increase among all CMAs in Canada in 2011, just after Victoria (+2.1 per cent). The largest gains were recorded in Halifax (+3.5 per cent) and Saint John, NB (+3.4 per cent) in Consumer prices in the Calgary CMA are forecast to increase 1.9 per cent in 2012 and 2.3 per cent in Calgaryʼs inflation rate is then forecast to average 2.1 per cent annually from 2014 to Housing Market: Housing starts in the Calgary CMA reached 9,292 units in 2011, essentially unchanged from 9,262 units in This was mainly a result of the decreased activity in the singledetached market, which was down 12 per cent on an annual basis. According to CMHC, the decline in single-detached starts was due to reductions registered in the first half of 2011 when the market was adjusting to the increased supply from the resale market. 36 In contrast, multi-family starts, which include semi-detached units, row housing, and apartments, increased 21 per cent year-over-year in The Conference Board of Canada expects total housing starts in the Calgary CMA to reach 9,450 units in 2012 and just over 10,100 units in The main support for the overall gain over the medium-term is expected to come from increased activity in the multi-family market. 37 The number of existing homes sold in the Calgary CMA as measured by the Multiple Listing Service (MLS) totaled 22,466 units in 2011, representing an increase of 7.0 per cent from the previous year. Average residential resale prices increased 1.0 per cent annually to $402,851 in CMHC is forecasting that MLS sales in the Calgary CMA will increase to 22,700 units in 2012 and the average MLS resale price will increase to $411,000 during the same time period. 38 Rental Market: The apartment vacancy rate in the Calgary CMA declined to 1.9 per cent in 2011, from 3.6 per cent in This was the second consecutive annual decline and also marked the lowest rate since October The average rent for a two-bedroom apartment in the Calgary CMA increased 1.8 per cent to $1,084 per month in 2011, from $1,069 per month in Among the major CMAs included in the CMHCʼs Rental Market Survey, Calgary had the fourth highest average monthly rent for a two-bedroom apartment in The highest average monthly rents were in Vancouver ($1,237), Toronto ($1,149) and Ottawa ($1,086) Conference Board of Canada, Metropolitan Outlook 1 Winter 2012, p. 4. Statistics Canada, The Consumer Price Index, January Conference Board of Canada, Metropolitan Outlook 1 Winter CMHC, Housing Now - Calgary CMA, January 2012, page 3. Conference Board of Canada, Metropolitan Outlook 1 Winter 2012, p.62. Canada Mortgage and Housing Corporation, Housing Market Outlook Calgary CMA, Fall 2011, p.4. Canada Mortgage and Housing Corporation, Rental Market Report Calgary CMA, Fall 2011, page 3. Alberta Human Services 15

16 Building Permits: The value of building permits issued in the Calgary CMA totaled $5.19 billion in 2011 ($2.72 billion in residential and $2.46 billion in non-residential permits), up 47 per cent from a total of $3.5 billion worth of permits issued in While the value of both residential and nonresidential building permits increased on an annual basis, it was the gain in the non-residential sector that supported the overall increase. The only component of the non-residential sector recording a decline in 2011 was the institutional and government permits (-20.6 per cent). In comparison, the total value of building permits issued in the Edmonton CMA declined one per cent year-over-year to $1.0 billion in Non-Residential Building Construction: Total investment in non-residential building construction in the Calgary CMA declined 18 per cent year-over-year to $3.27 billion in While there was some increased investment in the commercial and industrial sectors, the overall decline was mainly a result of a 47 per cent decrease in the institutional sector in the Calgary CMA. With this level of investment, Calgary ranked third in terms of total investment in non-residential building construction among major metropolitan areas in Canada in 2011, behind Toronto ($8.02 billion) and Montreal ($3.52 billion). Office Market: Calgaryʼs office market flourished in 2011, experiencing a record rate of absorption. In 2011, Calgaryʼs downtown office market absorbed 2.4 million square feet of space, resulting in the downtown vacancy rate dropping to 4.5 per cent at year-end 2011, from 10.4 per cent in the final quarter of With no new major supply of downtown office space planned until late 2014, Avison Young is forecasting the downtown office space vacancy rate will fall to 3.0 per cent by yearend Population: Calgaryʼs population reached an estimated 1,090,936 in 2011 according to results of the 2011 Civic Census. 42 This represented an increase of 19,421 residents or 1.8 per cent from Just over half of the total population growth in 2011 was due to natural increase (9,858 persons), while the remaining growth was due to positive net migration. Just over 9,500 net new people moved to Calgary in 2011, representing an increase from 2010 when a net of 4,150 people moved away from Calgary. The Conference Board of Canada is forecasting the total population of Calgary will reach an estimated 1.3 million in 2012 and 1.36 million in Calgaryʼs population is then forecast to reach 1.42 million by Net migration is expected to be the main driver of total population growth over the next five years, accounting for approximately 60 per cent of the growth Government of Alberta, Monthly Economic Review, February 2012, p.6. Avison Young, Calgary Market Overview, The Office Report, 4 th Quarter 2011, p.2. The City of Calgary, 2011 Civic Census Results, p.9. Conference Board of Canada, Metropolitan Outlook 1 Winter Alberta Human Services 16

17 TRENDS IN THE LABOUR MARKET This section examines labour market information for Canada, Alberta, and the Calgary Region in CANADA 2011 REVIEW Employment in Canada increased by 265,200 or 1.6 per cent in 2011, however approximately 95 per cent of the new jobs were created in the first half of the year. Regardless of how you look at it, the pace of job creation in Canada is weak. In fact, on a three-month moving average basis, the job market is currently weaker than any nonrecessionary period. The sharp softening in the job market in the second half of 2011 made the past year a highly asymmetrical one in terms of job creation with the first six months accounting for almost all the jobs created during the year. 44 Canada Table 1: Labour Force Survey Statistics Canada Annual Change Percent Change Population 27,658,500 27,987, , % Labour Force 18,525,100 18,699, , % Employed 17,041,000 17,306, , % Unemployed 1,484,100 1,393,100 (91,000) -6.1% Participation Rate 67.0% 66.8% -0.2% - Employment Rate 61.6% 61.8% 0.2% - Unemployment Rate 8.0% 7.4% -0.6% - Source: Statistics Canada CANSIM Table Labour force survey estimates (LFS) With the exception of New Brunswick, all provinces contributed to Canadaʼs employment gain in Ontario accounted for close to half of the net new jobs in Canada in 2011, where employment increased by 1.8 per cent year-over-year. Alberta had the highest year-over-year employment growth rate in 2011 at 3.8 per cent, accounting for 30 per cent of the net new jobs in Canada, followed by Newfoundland and Labrador at 2.7 per cent and Prince Edward Island at 2.0 per cent. Employment in New Brunswick declined by just over 4,000 or 1.2 per cent in CIBC Economics, Canadian Employment Quality Index, January 25, 2012, p.1. Alberta Human Services 17

18 Figure 3: 2011 Change in Employment: Canada and Provinces (annual change) Canada 265,200 ON 121,300 AB 77,500 QB BC NL MN SK PE NS 38,500 18,200 6,000 4,700 1,600 1, NB -4,100-50, , , , , , ,000 Jobs Source: Statistics Canada Employment growth in Canada is forecast to moderate, from 1.6 per cent in 2011, to 0.8 per cent in Employment in Canada is then forecast to increase 1.1 per cent in Alberta is expected to lead employment growth in both 2012 (+2.2 per cent) and 2013 (+1.7 per cent). Albertaʼs labour market has heated up, with stronger employment growth now forecast for 2012 at more than double the national pace. In several sectors, labour shortages and cost pressures are surfacing. Exports of oil, wood products and minerals should continue to sustain the regionʼs outperformance, though Western Canada remains sensitive to global growth prospects. 45 Figure 4: Employment Growth Forecast: Canada and Provinces (annual % change) 4.0% f 2013f 3.0% Annual % change 2.0% 1.0% 0.0% -1.0% -2.0% Canada NL PE NS NB QC ON MB SK AB BC Source: Scotiabank, Global Forecast Update, February 2, Scotiabank, Global Forecast Update, February 2, 2012, p.6. Alberta Human Services 18

19 Canadaʼs unemployment rate averaged 7.4 per cent in 2011, down from 8.0 per cent in Saskatchewan had the lowest unemployment rate in the country in 2011, followed by Alberta and Manitoba. TD Economics is forecasting Canadaʼs unemployment rate will hover around 7.5 per cent over the next two years, averaging 7.6 per cent in 2012 and 7.4 per cent in Alberta, Saskatchewan and Manitoba are expected to have unemployment rates below the national average over the next two years. Albertaʼs unemployment rate is forecast to fall to 5.0 per cent in 2012 and 4.8 per cent in 2013, the lowest among provinces, followed closely by Saskatchewan at 5.1 per cent in 2012 and 5.0 per cent in Albertaʼs unemployment rate dropped from 7.6% in March 2010 to 5.0% in November 2011, moving the province from the third lowest position to the lowest spot. One reason behind the labour shortages is that Saskatchewan, which usually acts as a responsive pool of spare workers for Alberta, is failing to do so currently because its economy is performing nearly as well as Albertaʼs. 47 Figure 5: Unemployment Rate Forecast: Canada and Provinces (annual % change) 14.0% f 2013f 12.0% Annual % change 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Canada NL PE NS NB QC ON MB SK AB BC Source: TD Economics, Provincial Economic Update, January 4, 2012 Employment by Type of Work, Gender and Age Full-time employment in Canada rose by 1.9 per cent in 2011, accounting for nearly all of the jobs created in the year. The number of part-time jobs increased slightly by 0.2 per cent in However, according to CIBC Economics, high paying full-time jobs in Canada increased by only 0.4 per cent in 2011, compared to an increase of 1.7 per cent for low paying full-time jobs. The worsening composition of the compensation sub-index reflects strong growth rates in relatively low-paying sectors such as Accommodation Services, Restaurants, Wood and Miscellaneous Manufacturing and Personal Care. Several higher-paying sectors, including Public Administration, Chemical Manufacturing, Computer and Electronic Manufacturing, Petroleum and Coal Manufacturing, Transportation, and Mining experienced a net job loss during the year TD Economics, Provincial Economic Update, January 4, 2012, p.7. Ibid, p.3. CIBC Economics, Canadian Employment Quality Index, January25, 2012, p.2. Alberta Human Services 19

20 The number of self-employed Canadians was relatively unchanged in 2011, while paid employment rose by 1.8 per cent. Employment for men increased close to 2.0 per cent in 2011, almost double the rate of growth experienced by women in Canada. Youth employment managed a 0.8 per cent gain in 2011, after declining by close to 1.0 per cent in Employment for core-aged Canadians (25 54 years) increased 1.0 per cent in 2011, while employment for those aged rose 3.7 per cent. Employment for Canadian seniors age 65+ increased by 7.5 per cent in Older Canadians are blazing trails on many fronts. With better health outcomes and longer life spans, many are able to do things that previous generations may not have been able to. Case in point is the nationʼs job market as recent employment data show that older workers have been the dominant age cohort. Since the recovery began in mid-2009, individuals aged 60 years and older have accounted for about one-third of all net new job gains a striking figure considering they accounted for just 8% of the total labour force. 49 Table 2: Employment in Canada by Type of Work, Gender and Age Canada Annual Change Percent Change Employment 17,041,000 17,306, , % Full time 13,736,700 13,995, , % Part time 3,304,400 3,311,200 6, % Employees 14,371,200 14,635, , % Public Sector 3,511,100 3,563,000 51, % Private Sector 10,860,200 11,072, , % Self-empoyed 2,669,800 2,670, % Men 8,911,600 9,085, , % Women 8,129,500 8,221,100 91, % years 2,451,300 2,470,600 19, % years 11,653,600 11,771, , % years 2,443,300 2,534,600 91, % 65 years+ 492, ,700 36, % Source: Statistics Canada CANSIM Tables and Labour force survey estimates Employment by Industry The services-producing industries in Canada accounted for three-quarters of the net job gains in 2011, increasing by 1.5 per cent. With the exception of the trade and finance, insurance, real estate and leasing industries, the remaining services-producing industries in Canada recorded increases in employment in The transportation and warehousing industry posted the highest employment growth rate in 2011 at 4.7 per cent. Employment in the goods-producing industries in Canada rose by 1.7 per cent in With the exception of the utilities industry, which declined by 5.7 per cent, all goods-producing industries recorded annual employment gains. Construction employment rose by 3.7 per cent or 45,000 in Looking ahead, CIBC 49 TD Economics, Observation, Older Workers Stampede into the Labour Market, February 23, 2012, p.1. Alberta Human Services 20