1. Edmonton’s Economic Outlook

2. Agenda The Context Long-Term Outlook International Context
Energy Prices
Regional & Local Current Indicators
Long-Term Outlook
Edmonton & the Region
Risks to the Outlook

3. Global Context
An uneven and anemic recovery - slower then that from the Depression
Forecast growth rates in most regions have been lowered
Euro zone countries finally showing sustained growth
Global financial markets remain fragile – large capital outflows from emerging markets
While 2016 should be a better year, slowing growth in China is problematic due to its increasing share of global output
Greek economy is now 30% smaller then it was in The Italian economy is 8% smaller. Spain is 4% smaller. Portugal 5% smaller. Ireland also about 5%. By way of comparison the Canadian economy is 6% bigger. We made up all the losses in the recession in less then one year.
Source: International Monetary Fund

4. Oil Prices West Texas Intermediate
Source: US Energy Information Administration 4

5. Oil Prices Improve $US/BBL
Source: Bloomberg

6. Natural Gas Prices Henry Hub
Source: US Energy Information Administration 6

7. Unemployment Accelerates
Process leading to higher unemployment very different between Calgary with job losses and Edmonton with labour force growth
The Edmonton region’s rate of job growth is positive year over year at 3.9%.
A recent shift to part–time job gains may undercut consumer spending over the next 12 to 18 months
Unemployment in the Edmonton region will approach the 7.5% range by mid 2016
Source: Statistics Canada

8. Employment Growth by Region May 2015 to May 2016 3 Month Moving Average
Source: Statistics Canada

9. Change in Employment May 2015 to May 2016 Three month moving average
Job Gains
Job Losses
Alberta (-32,500)
Retail
20,200
Manufacturing
-26,400
Prof. Services
10,900
Agriculture
-16,400
Education
9,700
Hospitality
-15,900
Info., Culture, Rec
5,900
Logistics
-13,500
Edmonton CMA (+29,500)
17,100
-12,300
Other Services
9,400
-5,300
6,200
Primary
-4,600
Public Admin.
6,400
Source: Statistics Canada

10. Employment Growth by Metro May 2015 to May 2016
Source: Statistics Canada

11. Edmonton CMA’s Population Growth 2015
Total 30,534
Source: Statistics Canada

12. Consumer Inflation Normalizing
Year-over-Year Change in CPI
The region’s year-over-year inflation rate slowed sharply in the first quarter of 2015
Housing, clothing and food prices continue to move up
Inflation will hold at current levels. Forecast is for a move toward 2.0% in 2016
Lower inflation will boost real incomes for Edmonton residents as wages continue to rise.
Source: Statistics Canada

13. City of Edmonton Housing Starts
Source: CMHC

14. Edmonton CMA Building Permits
Source: Statistics Canada

15. Edmonton CMA Median House Price Year to Date: May
Source: Edmonton Real Estate Board

16. Edmonton CMA Home Sales Year to Date: May
Source: Edmonton Real Estate Board

17. Canada, Alberta & Edmonton
Edmonton will outperform Alberta due to its relatively diverse economy
2015 brought dramatically slower growth for the City and negative growth for Alberta and the Edmonton CMA
A recession scenario for Edmonton requires low oil prices to persist and a pull back in provincial expenditures
Source: IMF, City of Edmonton, C4SE

18. Growth Moderates in the Longer Term
Real GDP Growth
The City experienced a sharp slow down during 2015.
City and region makes a gradual recovery to faster growth in 2016 while the province lags.
Continuing in migration allows the City and the region to grow more rapidly than Alberta and Canada in the final years of the outlook.
Source: City of Edmonton, C4SE 18

19. Risks to the Edmonton Outlook
Downside
Consumer confidence in Edmonton falters as incomes level off and concerns grow over job security
Low oil prices persist into 2017 and 2018 causing severe slump in energy investment and government spending
Brexit induced slowdown in Europe depresses commodity prices
Stricter controls on carbon emissions and opposition to energy investments constrain longer term growth
Upside
U.S. recovery gains additional momentum
US oil production and inventories are falling helping to firming up North American energy prices
Canadian business investment and exports show more strength and boost growth
Emerging market countries succeed in stimulating more rapid growth

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21. John Rose Chief Economist Financial Services and Utilities 780-496-6070 john.rose@edmonton.ca