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Edmonton’s Economic Outlook February, 2012. John Rose Chief Economist Financial Services. Agenda. Recent developments – Slowing Growth & Rising Risks International Context Canada , Alberta, Edmonton Energy Prices Alberta Employment, Inflation, - PowerPoint PPT PresentationTRANSCRIPT
John RoseChief Economist
Financial Services
Edmonton’s Economic OutlookFebruary, 2012
Edmonton’s Economic OutlookFebruary, 2012
Agenda
• Recent developments – Slowing Growth & Rising Risks
– International Context– Canada , Alberta, Edmonton– Energy Prices– Alberta Employment, Inflation,– Edmonton, Job Growth, Employment, CPI and Non-
Residential Construction Costs
• The outlook– Edmonton and the Region
Global Environment• An uneven and
anaemic recovery is underway
– Slow growth in advanced countries solid growth in developing economies
– Momentum is slowing in building in North America
• Europe to experience a ‘double dip’
– Europe may reduce stimulus too quickly
• Global financial markets remain fragile
– Greek, Irish, Portuguese and other sovereign debt issues
– Unresolved US debat on deficits
% Real Growth
-1 2 5 8
China
Emerging
World
Canada
US
Euro Area
2012 2013
Source: International Monetary Fund
Canada, Alberta & Edmonton• Canadian domestic
conditions remain good.• Slower US expansion will
slow growth particularly in eastern Canada.
• Alberta continues to outperform national average.
• 2011 has been a solid year for GDP & outstanding employment growth in Edmonton.
% Real Growth
0 1 2 3 4 5
City ofEdmonton
EdmontonCMA
Alberta
Canada
2012 2013
Source: IMF, Conference Board, Economic Trends and External Research
Oil PricesWest Texas Intermediate
Source: US Energy Information Administration
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec
$US
Bbl
5 Year Max
5 Year Min
2011
2010
Natural Gas PricesHenry Hub
Source: US Energy Information Administration
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec
$US
/mm
Btu
5 Year Max
5 Year Min
2011
2010
Alberta’s unemployment is down• Alberta’s labour
market is beginning to tighten.
• Unemployment should fall to an annual average of just below 5.0% in 2012.
• Unemployment rates significantly below 5% will trigger wage increases and higher inflation
Alberta's Unemployment Rate
0
1
2
3
4
5
6
7
%
Source: Statistics Canada
Annual Monthly
Alberta’s inflation is moving up• Inflation is now
running at 2.9% - about three times the rate in 2010.
• Key drivers have been electricity and gasoline prices.
• Inflation should moderate in the first half of 2012. The current forecast is 2.7% for 2012
Alberta Consumer Price Index
(2002= 100)
95
100
105
110
115
120
125
130
Source: Statistics Canada
Job Growth from January 2011 to January 2012
-35 -25 -15 -5 5 15 25 35
Calgary
Vancouver
Edmonton
Ottawa
Winnipeg
Halifax
Regina
Quebec
Toronto
Montreal
ThousandsSource: Statistics Canada
Unemployment is Trending Down
• Jobs lost in 2008 & 2009 have now been recovered.
• Edmonton’s rate of job growth higher then Alberta’s – among the fastest of any large municipality.
• Labour force has been growing which has moderated wage pressures. This process is ending – expect labour shortages and wage pressures in 2012
0
1
2
3
4
5
6
7
8
%
Source: Statistics Canada
Edmonton CMA Unemployment Rate
Consumer Inflation is Moving Up• Edmonton’s year over
year inflation rate is now 2.9% - one of highest rates since August 2008.
• Marked change from recent history when Edmonton was a low inflation environment.
• Costs associated with non-residential construction costs have begun to move up
Source: Statistics Canada
Edmonton CMA CPI
95
100
105
110
115
120
125
130
2005 2006 2007 2008 2009 2010 Dec
Non-residential Construction Price Index
• NRCPI has turned around to positive territory.
• Cost increases are still moderate but pressure on skilled trades appears to be building
• Longer term it should average in the 5.0% range
Source: Statistics Canada
-20
-15
-10
-5
0
5
10
15
20
25
2005
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
2011
Q1
2011
Q3
Real Growth in GDP for the City of Edmonton and the CMA
• The CMA has enjoyed a quicker recovery has manufacturing and non-residential construction activity picks up from very depressed levels.
• Over the medium term the City growth rate converges with that of the region.
• A somewhat younger demographic profile allows the City to grow slightly more rapidly then the region in the final years of the outlook.
GDP Growth
0
1
2
3
4
5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020%
Rea
l Gro
wth
Edmonton CMA City of Edmonton
Source: Economic Trends and External Research
The Way We Prosper• The City of Edmonton is gathering ideas for its
comprehensive economic development strategy, called The Way We Prosper.
• The strategy is being prepared with collaboration from Edmonton Economic Development Corporation and in consultation with a wide range of local business leaders, educational institutions, community organizations and federal and provincial agencies engaged in economic development.
• An online questionnaire is now available to gather the perspectives of Edmontonians. You are invited to participate by going to www.edmonton.ca/thewayweprosper
John Rose
Chief Economist
Financial Services
4th Floor, Chancery Hall
Edmonton, Alberta, T5J 2C3
(780) 496-6070