Signs of recovery in some sectors on the horizon
Ottawa, September 23, 2015 – Still reeling from lower oil prices, Edmonton’s economy is poised to contract by 0.1 per cent in 2015, according to The Conference Board of Canada’s Metropolitan Outlook: Autumn 2015.
“The decline in oil prices is set to take its toll on Edmonton’s economy as key industries post sluggish growth and even outright declines,” said Alan Arcand, Associate Director, Centre for Municipal Studies. “But it’s not all doom and gloom as sectors like housing and manufacturing are positioned for healthy gains. In addition, job growth is on track to remain positive.”
- Hit hard by low energy prices, Edmonton’s economy is expected to shrink by 0.1 per cent in 2015.
- Employment growth will remain positive at 0.9 per cent.
- Edmonton’s economy will begin to recover next year, but growth will be modest at 1.8 per cent.
- With a surprisingly strong start to the year, housing starts are expected to reach their second-highest level on record this year.
- Vancouver will be the fastest growing metropolitan economy in the country this year, while Calgary and Edmonton face recession.
The dramatic fall in oil prices has, not surprisingly, put a strain on many key industries in Edmonton. Despite the dramatic decline in oil prices, the resources, primary and utilities industry is set to grow this year, albeit by a meagre 0.5 per cent. Local manufacturing is projected to fare even better, with output on track to rise by 3.3 per cent in 2015. A key reason for this resilience is the continued rise in oil sands production. Unfortunately, the news is not as good for workers in these two industries as the lower oil prices are resulting in layoffs. Employment is expected to dip by 5.8 per cent in the resources, primary and utility sector and 1.8 per cent in manufacturing. Still overall employment growth will remain positive with a 0.9 per cent gain. At the same time, the unemployment rate will jump up from 5.1 per cent in 2014 to 5.8 per cent in 2015.
Edmonton’s construction industry will be hardest hit—output is forecast to shrink by 5.4 per cent this year. Despite plummeting energy sector investment, other business investment in building and structures and residential construction will remain healthy. Edmonton’s residential sector is faring much better than expected, thanks to robust activity in the multiple-units market. Multiple starts skyrocketed in the first quarter, paving the way for builders to break ground on 16,151 total starts this year – the second-highest number on records going back to 1972.
Edmonton’s services sector will also be sluggish this year with five of the eight services-producing industries on track to contract. Hampered by weak income and employment growth, the wholesale and retail trade sector is forecast to decline by 3.8 per cent this year. Meanwhile, transportation and warehousing output is expected to shrink 1.1 per cent this year, after posting average annual growth of 5.6 per cent between 2010 and 2014. Only the finance, insurance and real estate industry is expected to expand by more than 2 per cent this year.
Edmonton’s economic outlook looks brighter in 2016 with an anticipated expansion of 1.8 per cent.
Of the 13 CMAs covered in the report, Vancouver will have the fastest growing metropolitan economy in 2015. Toronto, Winnipeg, Halifax, and Montréal round out the top five spots. These cities are all on track to post economic growth above 2 per cent. In contrast, long-standing economic leaders Calgary and Edmonton face recession.