Transcript Slide 1

Edmonton’s Economic Outlook
February, 2012
John Rose
Chief Economist
Financial Services
Agenda
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Recent developments – Slowing Growth & Rising
Risks
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International Context
Canada , Alberta, Edmonton
Energy Prices
Alberta Employment, Inflation,
Edmonton, Job Growth, Employment, CPI and NonResidential Construction Costs
The outlook
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Edmonton and the Region
Global Environment
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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
China
Emerging
World
Canada
US
Euro Area
-1
2
5
2012
8
2013
Source: International Monetary Fund
Canada, Alberta & Edmonton
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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 of
Edmonton
Edmonton
CMA
Alberta
Canada
2012
2013
Source: IMF, Conference Board, Economic
Trends and External Research
Oil Prices
West Texas Intermediate
140.00
120.00
100.00
5 Year Max
$US Bbl
80.00
5 Year Min
2011
60.00
2010
40.00
20.00
0.00
Jan
Feb
Mar
Apr
May
Jun
July
Aug Sept
Source: US Energy Information Administration
Oct
Nov
Dec
Natural Gas Prices
Henry Hub
14.00
12.00
$US/mmBtu
10.00
5 Year Max
8.00
5 Year Min
2011
6.00
2010
4.00
2.00
0.00
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sept
Source: US Energy Information Administration
Oct
Nov
Dec
Alberta’s unemployment is down
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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
Annual
7
Monthly
6
5
%
4
3
2
1
0
20
05
20
07
20
09
Ja
n
ar
M
Source: Statistics Canada
ay
M
Ju
ly
Se
pt
N
ov
Ja
n
Alberta’s inflation is moving up
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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)
130
125
120
115
110
105
100
95
05
0
2
06
0
2
07
0
2
08
0
2
Source: Statistics Canada
09
0
2
10
0
2
D
ec
Job Growth from January 2011 to
January 2012
Calgary
Vancouver
Edmonton
Ottawa
Winnipeg
Halifax
Regina
Quebec
Toronto
Montreal
-35
-25
-15
Source: Statistics Canada
-5
5
Thousands
15
25
35
Unemployment is Trending Down
8
7
6
5
% 4
3
2
1
Source: Statistics Canada
O
ct
y
Ju
l
Ap
r
Ja
n
O
ct
Ju
l
0
Ap
r
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Edmonton CMA Unemployment Rate
Ja
n
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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
O
ct
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Consumer Inflation is Moving Up
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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
Edmonton CMA CPI
130
125
120
115
110
105
100
95
2005
2006
2007
Source: Statistics Canada
2008
2009
2010
Dec
20
15
10
5
0
-5
-10
-15
Q
3
20
07
Q
1
20
07
Q
3
20
08
Q
1
20
08
Q
3
20
09
Q
1
20
09
Q
3
20
10
Q
1
20
10
Q
3
20
11
Q
1
20
11
Q
3
1
-20
Q
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25
20
06
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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
20
05
•
Non-residential Construction Price
Index
Source: Statistics Canada
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The CMA has enjoyed a
quicker recovery has
manufacturing and nonresidential 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
5
% Real Growth
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Real Growth in GDP for the City of
Edmonton and the CMA
4
3
2
1
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Economic Trends and External Research
Edmonton CMA City of Edmonton
The Way We Prosper
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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
[email protected]