What a difference a year can make. Before oil prices started to plummet in June 2104, Alberta’s unemployment rate was sitting at an envious 4.8 per cent, the province was forecasting a huge surplus and one the biggest sore points in the oilsands industry was cranky old Neil Young. Since then, our major industry has been continually hammered by bad news with billions of dollars in mothballed energy projects, layoffs across the oil patch and we don’t need to repeat the effect falling oil revenue has had on our provincial government. Things are tough, even in suburban St. Albert, where the food bank has seldom experienced such demand.
In the midst of this mess comes a new report published last week in the Report on Business by Calgary-based Todd Hirsch, the chief economist of ATB Financial, who says that when five key economic indicators are examined, things may actually not be quite as bad as they seem. Alberta may have a stable, moderating economy.
The first positive news is that while retail sales may have taken a big hit in the fall of 2014, they are still 3.2 per cent above where they were at this time last year. As Hirsch says, that is hardly a collapse.
Housing starts, which he says is one of the best indicators of consumer confidence and demand, have also held steady during the troubled times. Though some regions have suffered more than others, the province recorded monthly starts throughout this year seven per cent above the same period a year ago. That’s not exactly bad news.
Other Canadians also continue to migrate to Alberta. Hirsch says most major economic slumps see far greater numbers of people returning to their home provinces, but Alberta welcomed 24,000 new residents from other parts of the country – 7,000 more than left.
Hirsch admits that most people do not consider the province to be a manufacturing hub, however, on a per capita basis, we are not far behind Ontario. But after dropping $1 billion a month from June 2014 to Christmas, the numbers have not budged since, indicating some stability
Finally and most importantly, he says while many high-paying jobs have been lost in the oil industry, Alberta’s unemployment rate is still only 5.7 per cent, higher than Saskatchewan’s 4.7 per cent but lower than the national average of 6.8 per cent. Compared with June 2014, when the price of oil peaked, nearly 23,000 more Albertans are working, though many in lower-paying service industry jobs. That, he maintains, is not great, but certainly no catastrophe.
Hirsch says these indicators must be taken for what they are worth, and with no recovery in oil prices predicted this year, our economic struggles may well likely get worse. On the other hand, they also point to a province with some resilience in the face of economic adversity. The numbers show the sky has not completely fallen and reports of catastrophe, collapse and crisis are often overblown.
As Hirsh says, if you don’t believe him, just crunch the numbers.
