Nov 8, 2011, Alberta bucks trend of shaky economies

By Myke Thomas, Calgary Sun

The Bank of Canada left its overnight rate at 1% amid fears international economies are dragging down the Canadian economy, but not so much in Alberta.

A report from Ben Brunnen, chief economist for the Calgary Chamber of Commerce, asks why Alberta and Calgary “didn’t get the memo.”

“Despite continued global economic uncertainty, annual investment (and reinvestment) has grown in Alberta’s energy sector since 2009, suggesting companies expect oil prices to remain in profitable territory for the foreseeable future,” says Brunnen.

“Job creation has been relatively robust throughout 2010-11, and net interprovincial migration numbers in 2012 are expected to be comparable to those in 2008.”
(Statistics Canada reports net interprovincial migration to Alberta was 15,317 people in 2008).

“With the value of non-residential building permits and oil and gas investment on the rise, it is anticipated that the pace of economic growth experienced by the province in 2010 and 2011 will continue into 2012, albeit somewhat moderately due to global economic concerns,” says Brunnen.

While the boil that was on Calgary during the boom hasn’t returned, it’s getting better all the time, says Brunnen.

“From September 2010-11, commercial vacancy rates declined 45%, with retail vacancy rates down 20% over this period,” he says.

“(This year) will mark the first year-over-year expansion in commercial building permit values since 2007, with total building permit values expected to increase 19%.”
(A City of Calgary report shows residential permit values to the end of September were $1.7 billion, up from $1.3 billion last year).

“Employment levels in most of Calgary’s major sectors turned a corner in 2010, and Calgary’s September 2011 unemployment rate declined by 1.1 percentage points on an annual basis to 6% — capping 11 consecutive months of total employment increases,” says Brunnen.

There are many visible signs in the city that the economy is better than two years ago: Many restaurants are close to being back to pre-recession business, Chinook

Centre is packed any given Saturday and cars with out-of-province licence plates seem to be everywhere (at this time of year, they’re not all here on vacation and the rental vacancy rate is 3.2%, down from 5.4% 18 months ago).

All the positive economic factors in Alberta and Calgary point to a housing market that should have taken off this fall selling season, but sales of both new and used homes are flat.

While Calgarians may not have received a memo, it seems they got at least one message delivered by Brunnen in his report.

“Calgary is entering a period of favourable economic growth in the face of global uncertainty, with the potential for significant downside risk due to our dependence on the energy sector,” he says.

If the uncertainty is settled, we could be in for quite the ride.