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John Rose Chief Economist Financial Services

Edmonton’s Economic Outlook February, 2012. John Rose Chief Economist Financial Services. Agenda. Recent developments – Slowing Growth & Rising Risks International Context Canada , Alberta, Edmonton Energy Prices Alberta Employment, Inflation,

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John Rose Chief Economist Financial Services

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  1. Edmonton’s Economic Outlook February, 2012 John Rose Chief Economist Financial Services

  2. 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

  3. 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 Source: International Monetary Fund

  4. 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. Source: IMF, Conference Board, Economic Trends and External Research

  5. Oil PricesWest Texas Intermediate Source: US Energy Information Administration

  6. Natural Gas PricesHenry Hub Source: US Energy Information Administration

  7. 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 Annual Monthly Source: Statistics Canada

  8. 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 Source: Statistics Canada

  9. Job Growth from January 2011 to January 2012 Source: Statistics Canada

  10. Unemployment is Trending Down Edmonton CMA Unemployment Rate • 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 Source: Statistics Canada

  11. Consumer Inflation is Moving Up Edmonton CMA CPI • 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

  12. 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

  13. 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. Source: Economic Trends and External Research

  14. 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

  15. John Rose Chief Economist Financial Services 4th Floor, Chancery Hall Edmonton, Alberta, T5J 2C3 (780) 496-6070 john.rose@edmonton.ca

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