Ottawa, October 17, 2017—Calgary and Edmonton are forecast to be the fastest growing census metropolitan areas (CMAs) in Canada this year, according to The Conference Board of Canada’s Metropolitan Outlook: Autumn 2017.
“The worst appears to be over for Calgary and Edmonton. Alberta’s economy has been getting stronger thanks to a rebound in drilling and increases in oil production, which has helped to fuel renewed economic growth in the province’s largest cities,” said Alan Arcand, Associate Director, Centre for Municipal Studies. “But with oil prices struggling to rise above US $50 per barrel, Edmonton and Calgary should expect to see more moderate growth in 2018.”
- Calgary’s economy is on track to surge by 4.6 per cent this year, before slowing to 2.1 per cent growth in 2018.
- Edmonton’s real GDP is expected to increase by 3.9 per cent in 2017 and slow to 2.2 per cent next year.
- While oil prices have improved over the past year, they are expected to remain below pre-recession highs. This will keep oil companies from investing in large-scale developments and limit growth in drilling.
Calgary’s economy is expected to expand by 4.6 per cent this year, making it the growth leader among the 13 CMAs in the report. Renewed investment and increased drilling are spurring growth in the primary and utilities and manufacturing sectors, while the construction industry is slowly recovering. On the services side, strong job gains are encouraging consumers to open their purse strings, raising wholesale and retail output by 7.0 per cent. Meanwhile, the transportation and warehousing industry is receiving a lift from rising goods sector activity, while the finance, insurance, and real estate industry is benefitting from a housing market recovery.
However, with oil prices expected to rise only gradually, Calgary’s real GDP growth is expected to slow to 2.1 per cent next year. Employment is expected to follow suit, with job growth moderating from 2.7 per cent in 2017 to 1.1 per cent in 2018. Although Calgary’s unemployment rate is expected to fall to 7.7 per cent by 2018, down from a 22-year high of 9.4 per cent last year, it will remain above the national average.
Like Calgary, Edmonton’s economy is benefiting from higher oil prices and increased investment and drilling plans. Both the local primary and utilities industry and manufacturing are expected to post strong output gains of 7.2 per cent and 5.6 per cent respectively this year. At the same time, output in the construction sector is also bouncing back. Despite still-high inventories, builders have come back to Edmonton’s housing market. Housing starts are set to increase from 10,000 units last year to 11,700 units this year, before falling back to just under 11,000 units in 2018. Non-residential construction has been busy with several non-energy projects, such as the new Valley Line LRT, the MacEwan Centre for the Arts, and a new Premium Outlet mall.
The near-term outlook for the economy is more modest, in line with expected gradual increases in oil prices. This will keep oil companies from making new large-scale investments and dampen growth in drilling. As a result, Edmonton’s economic growth is forecast to slow to 2.2 per cent in 2018.
Despite only a modest rise in employment this year, disposable income gains, still low interest rates, and brighter economic prospects have helped to encourage consumer spending. Retail sales have been robust and are expected to push growth in wholesale and retail trade above 4 per cent in 2017. Job growth is projected to improve next year, but consumer spending will slow in step with the overall economy. Thus, wholesale and retail trade output growth will also slow. Edmonton’s unemployment rate is expected fall next year but to remain above the national average.