John Rose Chief Economist Financial Services
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John RoseChief Economist
Financial Services
Edmonton’s Economic OutlookFebruary, 2012
Edmonton’s Economic OutlookFebruary, 2012
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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John Rose
Chief Economist
Financial Services
4th Floor, Chancery Hall
Edmonton, Alberta, T5J 2C3
(780) 496-6070