Alberta's Economic Outlook Catherine Rothrock Chief Economist & Executive Director Alberta Treasury Board and Finance December 6, 218
Solid growth in second year of recovery, differentials weigh on 219 outlook Growth moderating in 218 as recovery more entrenched Real GDP growth forecast to be a solid 2.5% Exports, consumer spending to support growth Headwinds for 219 Pipeline bottlenecks leading to a wider Alberta crude differentials Weaker investment and exports to weigh growth A prolonged recovery Lingering effects of downturn on corporate profits and investment Full recovery in real GDP not expected until 219 Government revenue not forecast to reach 214-15 levels until 219-2
Household weighs on activity Contribution to year-over-year change in the Alberta Activity Index (percentage points) 12 Energy Household Activity General Business Activity Labour Market 8 Alberta Activity Index 4-4 -8 Source: Alberta Treasury Board and Finance
Business output surges Alberta manufacturing shipments and international exports ($billions) 12 ($billions) 7. International Exports (Left) Manufacturing Shipments (Right) 11 6.5 1 9 6. 8 5.5 7 5. 6 5 4.5 Source: Statistics Canada
Alberta crude differentials blow out Price differential in between the West Texas Intermediate and Western Canadian Select, Edmonton Syn -Crude and Edmonton Mixed Sweet Blend Prices (US$/bbl) 6 WTI-WCS WTI-SynCrude WTI-MSW 5 4 3 2 1-1 Source: Bloomberg
Drilling activity levels off Number of Alberta active rigs drilling (Rigs Drilling) 5 Range 21-214 216 217 218 45 4 35 3 25 2 15 1 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Canadian Association of Oilwell Drilling Contractors (CAODC)
Modest improvement in oil prices, wider differential hits Alberta producers Oil Prices (US$/bbl.) Light-Heavy Differencial Western Canadian Select WTI 12. 1. 8. 6. 4. 2.. 29-1 21-11 211-12 212-13 213-14 214-15 215-16 216-17 217-18 218-19e Sources: Alberta Energy, f-forecast
($27billions) (million barrels per day) Wide differentials weigh on investment Oil Sands Investment Conventional Oil and Gas Investment Production (Right) 55 4. 5 45 4 35 3.5 3. 2.5 3 2. 25 2 15 1 1.5 1..5 5. Source: Statistics Canada, Alberta Treasury Board and Finance; f-forecast
Non-residential spending still lagging despite rebound in industrial Non-residential building construction investment (y/y % change) 2 15 1 Industrial Buildings Commercial Buildings Institutional & Governmental Buildings Growth in Non-Residential Investment 5-5 -1-15 -2 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 215 216 217 218 Sources: Statistics Canada
Manufacturing investment surges Change in Alberta manufacturing investment (%) 1.2 Other Petroleum, Chemical and Related.8 Food & Beverage Total Manufacturing.4. -.4 -.8 213 214 215 216 217e 218i Sources: Statistics Canada, e-estimate, i-intentions
Contractor prices picking up Year-over-year change in non-residential construction index (%) 5 4 Non-Residential Construction Costs Calgary Edmonton 3 2 1-1 -2-3 -4-5 Source: Statistics Canada
Broad-based gains in employment Year-over-year change in employment (thousands) 6 42.3 4 35.3 3.6 2 18.4 15.5 11.8 8.4 7. Total Public Private Self-Employed Part-Time Full-Time Goods Sector Service Sector Sources: Statistics Canada
Increased participation pushes unemployment rate higher Alberta participation & unemployment rate (%) (%) 73.5 Participation Rate (Left) Unemployment Rate (Right) 1 9 73. 8 72.5 7 6 72. 5 4 71.5 3 71. 2 1 7.5 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 Jun-18 Oct-18 Source: Statistics Canada
Uneven recovery across regions Seasonal adjusted employment indexed to peak month, by region (Peak=1) 14 Other* Calgary Wood Buffalo-Cold Lake** Edmonton Lethbridge-Medicine Hat Peak 1 96 92 88 Source: Statistics Canada, Haver Analytics, TBF *Other includes Red Deer, Camrose-Drumheller, and Banff-Jasper-Rocky Mountain House, Athabasca-Grande Prairie-Peace River ** No LFS data reported for Wood Buffalo-Cold Lake from June-September 217
Gradual recovery in labour market Alberta Labour Market Indicators (s) (%) 2,5 Employment (Left) Unemployment Rate (Right) 9 8 2,3 7 6 2,1 5 1,9 4 3 1,7 2 1 1,5 21 211 212 213 214 215 216 217f 218f 219f Source: Statistics Canada and Alberta Treasury Board & Finance, Budget 217 and 217-18 Second Quarter Fiscal and Economic Update
Natural increases and immigration drive population gains Change in the Alberta population by component (Thousands) (%) 14 Natural Increase (Left) Net International (Left) Net Interprovincial (Left) Population Growth (Right) 3.5 12 3. 1 8 6 4 2 2.5 2. 1.5 1..5-2. -4 -.5 Sources: Statistics Canada and Alberta Treasury Board and Finance Budget 218, f-forecast Revised historical series with Q2 forecast (population growth rate is not adjusted to new base)
Households being cautious Year-over-year growth in retail sales and average weekly earnings, by category (%) 14 Retail Sales Average Weekly Earnings 12 1 8 6 4 2-2 -4 Source: Statistics Canada
Consumer inflation rise with energy prices Year-over-year change in the Alberta Consumer Price Index (%) 4 All Items All Items Excluding Energy 3 2 1-1 Source: Statistics Canada
Housing market softening Annualized Alberta housing starts & existing home sales* (Thousands) Housing starts Existing home sales 65 6 55 5 New mortgage rules pulled sales forward 45 Fort McMurray Rebuilding 4 35 3 25 2 Source: Canadian Real Estate Association, Canada Mortgage and Housing Corporation *3-month moving average
Residential construction activity moderates Alberta housing starts (%) 6 5 4 3 2 1 Source: Canada Mortgage Housing Corporation and Alberta Treasury Board and Finance, Budget 217 and 217-18 Second Quarter Fiscal and Economic Update
Pipeline bottlenecks to weigh on 219 growth Contributions to Alberta Real GDP by Expenditure Growth (percentage points) 15 Exports Imports Total Domestic Demand* Real GDP 1 5-5 -1 Source: Statistics Canada, Alberta Treasury Board and Finance; f-forecast * Includes total household, business and government spending.
Alberta economy resilient Nominal GDP Per Capita ($thousands) 1 8 Rest of Canada Range Rest of Canada Average Alberta 6 4 2 Sources: Statistics Canada, Alberta Treasury Board and Finance and TD Economics, f-forecast
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