The latest economic outlook for Alberta says the recession is officially over, with modest growth expected in the coming year — but it will be a few years before that translates into jobs.
ATB Financial released the latest Alberta Economic Outlook Thursday, saying nearly 35,000 new jobs were added in 2017. It predicts at least a three per cent increase in the province’s GDP this year.
“We’ve actually seen Alberta’s economy post a modest rebound in 2017 and that comes after, of course, the two nasty years of recession,” Todd Hirsch, chief economist at ATB Financial, told CBC Calgary.
Hirsch said oil prices dipping to around $45 per barrel this summer took the “wind out of the sails of the economy.”
“The energy sector continues to be challenged by oil prices hovering below $50 US per barrel,” Hirsch said in a release.
“At those levels, Alberta’s energy sector struggles. Drilling activity and hiring has picked up modestly, but growth in the sector remains tenuous and not likely to snap back to pre-recession levels anytime soon.”
- Watch ATB Chief Economist Todd Hirsch summarize the latest Alberta Economic Outlook in the video below:
There are still more people leaving the province to find work elsewhere, but Hirsch said he expects that trend to reverse next year as more employers start hiring.
ATB Financial said in the outlook that nearly 18,200 people left Alberta in the first three months of 2017 while around 15,800 came to the province for “the sixth consecutive quarter of net out-migration.”
Job seekers should have ‘a bit of patience,’ Hirsch warns
Hirsch said jobs are “gradually coming back” to the province, but job seekers should “have a bit of patience” as the job market recovers.
While there has been an increase by some oil companies hiring field workers, Hirsch said the overall wages in the oil and gas sector have dropped.
“[Companies] are finding they need to replace some people but they’re hiring them at lower wages or hiring lower-paid workers in the first place,” Hirsch said, adding corporate oil and gas jobs have yet to make a strong comeback in Alberta.
“Alberta’s economy is recovering, but it is not returning to what it looked like in 2014,” Hirsch said in a release. “Instead, the economy is evolving into one that is more diversified, and more typical of other Canadian provinces. It is a slow process and it may be a few more years before we see a full economic recovery.”
But the outlook for the province is still sunny compared to years past, thanks to “pretty decent” gains in the agriculture and agri-foods industries, he said.
Retailers in the province had a record-breaking quarter with nearly $6.9 billion in sales during the month of June, breaking the previous record of $6.7 billion from October 2014.
Economic growth expected to be slow
While things are looking up for Alberta, Hirsch said the province is unlikely to reach the economic highs of 2014.
He said the province saw its GDP decrease by about 7.5 per cent combined in 2015 and 2016.
“Now we’re getting back to growth but we’re starting at a lower bar,” Hirsch said.
“We’ve got some catching up to do.”
ATB says economic growth will continue next year and forecasts another two per cent bump to the GDP in 2018.
“Next year the economy continues to grow but at a lower rate … because we’re expecting those oil prices to remain pretty close to $50 or $55.”
He said at least 10 refineries in Texas have been shut down because of Tropical Storm Harvey, putting some “strain on the market” and possibly impacting economic outlooks if refineries stay shut down for long.
“If it’s a month or even longer that some of those [refineries] are offline, then it starts to have a more significant impact,” Hirsch told the CBC.
“But right at this point, it’s still a bit early to tell.”