Economic Trends

In-depth analysis of recent developments in Alberta’s economy.

Latest Economic Trends

Download the complete report: Economic Trends (May 2018)
Published June 1, 2018 (PDF, 292 KB)

See below for highlights from the publication.

Alberta economy maintaining momentum despite moderation in some parts

  • The Alberta economy is maintaining momentum despite moderation in some parts of the economy.
  • The labour market has stabilized after making substantial gains in the second half of 2017.
  • While growth in retail sales has softened, housing starts have picked up.
  • On the business side, conventional crude oil production is ramping up while exports and manufacturing shipments have regained some ground after suffering from temporary setbacks earlier in the year.

Alberta household sector

Goods sector boosts employment

  • Alberta’s labour market is being supported by strong job gains in the goods sector.
  • Goods sector employment has expanded by over 12,000 so far this year and has accounted for all the job gains, led by an outsized increase in manufacturing (Chart 1).

Chart 1: Employment gains concentrated in the goods sectors
Change in seasonally adjusted employment since December 2017

Chart 1: Employment gains concentrated in the goods sectors: Change in seasonally adjusted employment since December 2017
Source: Statistics Canada

Earnings hold on to gains

  • Average weekly earnings (AWE) remained relatively steady after advancing substantially in the second half of 2017, with a pickup in the services sector offsetting some weakness in the goods sector.
  • In the first quarter of 2018, service sector AWE advanced 3%, supported by solid increases in retail trade and management of companies, which reached new highs.

Renewed interest in apartment construction

  • Residential developers are building more multi-unit buildings which is lifting overall housing starts.
  • After slumping at the beginning of the year, starts rebounded to over 29,000 units (annualized) in April.
  • This was mainly due to rising apartment starts, which reached a 5-month high in April.

Car sales a drag on retail spending

  • New vehicle sales have softened after being a source of strength in retail trade last year.
  • New vehicle sales were down 2.9% through March, dragged down by fewer car sales (-13.7%) which have trended lower since early 2015.

Alberta business sector

Resurgence in conventional production

  • Conventional crude oil production continues to increase, building on the gains made in the latter half of 2017.
  • It has risen 12% since August 2017, hitting an almost three-year high of 557,000 barrels per day (bpd) in March.

Rail bottlenecks starting to ease

  • Rail transportation issues that have adversely affected Western Canadian exporters are starting to subside.
  • Railway carloadings originating from Western Canada bounced back in March (+29% m/m) following a large drop in February.

Business output remains solid amid temporary setbacks

  • Business activity in the province is picking up after being affected by railway disruptions and other temporary issues earlier in the year.
  • Merchandise exports rebounded sharply in March, lifted by a jump in agriculture (+49.3% m/m) and forestry products (+19.7% m/m) as well as a pickup in energy exports.

Chart 2: Exports and manufacturing shipments regain some ground
Alberta manufacturing shipments and merchandise exports

Chart 2: Exports and manufacturing shipments regain some ground: Alberta manufacturing shipments and merchandise exports
Source: Statistics Canada

Outside Alberta

Canadian resale housing activity slowing

  • Canada’s resale housing market had a slow start to the year, reflecting the impact of tighter mortgage rules and higher interest rates.
  • National home sales fell in the last 4 months, bringing the decline to 22% relative to the December 2017 peak.

Interest rate hikes on pause

  • The Bank of Canada (BoC) has remained on the sidelines since raising its policy interest rate in January.
  • The BoC has held rates steady due to concerns about elevated household debt, a softening housing market, and uncertainties surrounding U.S. trade policies.

Latest InFocus

Download the complete report: InFocus (May 2018)
Published June 1, 2018 (PDF, 292 KB)

The InFocus section covers a relevant economic topic in more depth. See below for highlights.

Alberta 2017 economic rebound

This month’s inFocus discusses the recovery in Alberta’s real GDP by industry in 2017.

  • The Alberta economy began to recover in 2017 following a 2-year recession made worse by the devastation of the 2016 Fort McMurray wildfires.
  • Alberta real GDP by industry grew 4.9%, recovering about 60% of losses experienced during the downturn.
  • While gains were broad-based across sectors, a rebound in the energy sector drove the recovery - see Table 1 of the InFocus section (PDF, 292 KB).

Energy sector leads the recovery

  • On the back of improving global energy prices, Alberta’s energy sector grew markedly in 2017.
  • Conventional oil and gas activity rebounded from recessionary levels, as the number of rigs drilling for oil and gas in the province surged 66%.

Energy output lifts related sectors

  • The robust energy sector recovery supported output in closely related sectors.
  • Increased shipments of energy products and machinery and equipment - much of which are energy related - spearheaded growth in the manufacturing sector.

Spillovers ripple through economy

  • More sectors joined the recovery throughout the year as momentum spread beyond energy-related output.
  • Broad-based gains across non-energy related products complemented energy-related growth in the manufacturing and wholesale trade industries.
  • Among non energy-related industries, growth in 15 out of 17 manufacturing industries and 6 out of 7 wholesale industries contributed to the recovery.

Residential construction upswing

  • Residential construction real GDP gained back about 15% of peak-to-trough losses in 2017.
  • Renewed consumer spending and widlfire-related residential rebuilding efforts in Fort McMurray facilitated the rebound, as the number of housing starts in the province increased 20% from 2016.

Good year for finance and real estate industries

  • Output in the FIRE (finance, insurance and real estate) services sector defied the downturn, continuing to grow in 2015 and 2016.
  • In 2017, the industry benefited further from increased consumer spending and residential construction, as well as a boost in housing resales as home buyers moved to get out ahead of anticipated 2018 lending and monetary policy tightening.

Engineering and commercial construction lagging

  • Contrary to the rebound in residential building construction, engineering and non-residential building construction remained weak throughout the year.
  • Construction wrapped up on large oil sands projects that began before the downturn, depressing real GDP in oil and gas engineering construction industries.
  • Declines in engineering and non-residential building construction real GDO just outweighed growth in residential building construction real GDP in 2017.
  • As a result, after declining sharply during the recession, aggregate construction sector real GDP remained essentially flat in 2017 (Chart 3).

Chart 3: Weak engineering and non-residential construction weigh on sector
Contribution to change in Alberta construction sector real GDP

Chart 3: Weak engineering and non-residential construction weigh on sector: Contribution to change in Alberta construction sector real GDP
Source: Statistics Canada and Alberta Treasury Board and Finance

Alberta leads growth nationwide

  • There was synchronized growth nationwide in 2017 (Chart 4).
  • Real GDP by industry increased in every Canadian province for the first time since 2011.
  • Alberta led the charge, thanks to the oil price recovery and economic rebound in the province.

Chart 4: Alberta leads growth
Real GDP growth by province

Chart 4: Alberta leads growth: Real GDP growth by province
Source: Statistics Canada

Archive

2018

Issues prior to 2018

Economic Trends Archive (March 2012 to current)

Economic Spotlights

These newsletters focus on a particular theme related to the Alberta economy and are published occasionally.

2018

Issues prior to 2018

Economic Spotlights Archive (2000 to current)

Sign up for updates

Subscribe to get our economic publications by email

Contact

Contact for Economic Trends

Kathleen Macaspac, Manager, Macroeconomic Forecasting
Alberta Treasury Board and Finance

Phone: 780-427-8841
Toll free: 310-0000 before the phone number (in Alberta)
Email: kathleen.macaspac@gov.ab.ca

Contact for InFocus

April Seburn, Economist
Alberta Treasury Board and Finance

Phone: 780-427-7543
Toll free: 310-0000 before the phone number (in Alberta)
Email: april.seburn@gov.ab.ca