CALGARY, ALBERTA and EDMONTON, ALBERTA--(Marketwire - Aug. 17, 2012) - Fuelled by rising oil production, Alberta will lead Canada in economic growth this year. Employment in Calgary and Edmonton is expected to strengthen through 2016 with the addition of 120,000 new jobs, according to a special report released today by BMO Capital Markets Economics.
The BMO report - Calgary and Edmonton: Partners in Economic Growth - notes that the spill-over effect of rising oil production extends across various sectors in both Calgary and Edmonton, including manufacturing of products for oil exploration and extraction, transportation, warehousing and retail trade. The report is the latest in a series of economic and business overviews in various cities across Canada that are bring published by BMO throughout the year.
"Over the medium term, employment in Alberta's two largest cities should strengthen through 2016, adding a combined 120,000 jobs," said Robert Kavcic, Economist, BMO Capital Markets and author of the report. "We anticipate that the jobless rate will be below four per cent in both cities - back to pre-recession levels, but not quite as low as during the period of extreme labour shortages in 2006-2007."
Employment, hit hard during the recession with falling oil prices and tight credit conditions in the energy sector, rebounded to record levels up 4.1 per cent and 2.9 per cent year over year, in Calgary and Edmonton respectively, in the first seven months of the year. Average employment in Canada, meanwhile, is up one per cent. Furthermore, Alberta's economy is projected to grow 3.2 per cent this year, compared to the national projection of two per cent.
"The BMO outlook delivers good news for businesses and residents in Edmonton, and based on projected growth rates, we're confident the Edmonton economy can remain on a very healthy growth path," said Rick Hersack, Chief Economist, Edmonton Chamber of Commerce. "The risk to stronger than anticipated growth is a shortage of labour and a possible home bubble," he added.
"Alberta is performing above expectations and we are very bullish on Calgary's economy," said Ben Brunnen, Chief Economist with the Calgary Chamber. "With low unemployment and net migration at levels not seen since 2006, it's going to be a big year for our city."
"Our commercial clients are confident and making important investments in new equipment, expanding their operations and hiring people," said Bill Hogg, Vice-President, Commercial Banking, Alberta/NWT at BMO Bank of Montreal. "We urge businesses in Calgary and Edmonton and all of Alberta to get their share of the $10 billion in credit BMO has made available, giving them access to the capital they need to grow and get their operations firing on all cylinders."
Housing demand has gained momentum, with existing home sales up nearly 20 per cent year over year in Calgary through the first six months of the year and a more modest 7.5 per cent in Edmonton.
Average house prices, while still below the 2007 peak, are again moving higher in both cities. In July, the average house price in Calgary was $409,700; in Edmonton it was $337,300. Average prices in Calgary and Edmonton are now lower than five times and four times estimated median family income, respectively, making them more affordable than Toronto and Vancouver.
Non-residential construction has begun to pick up, boosted by expanding office and retail space in Calgary and projects like Edmonton's recently-completed EPCOR office tower. Overall government construction spending, even with airport upgrades in both cities, continues to soften.
Population growth has picked up in Calgary and Edmonton after slowing during the downturn and is now running at more than twice the national average. Scarcity of skilled labour could become an issue if economic growth continues at above average pace.
The full report can be downloaded at: http://www.bmonesbittburns.com/economics/reports/20120817/SR120817.pdf
About BMO in Alberta
BMO Financial Group has more than 2,600 employees and serves customers from 104 BMO Bank of Montreal branches in Alberta. In 2011, BMO financed 33,110 firms in Alberta, providing $21.1 billion in funds. The Bank continually invests in the branch network with the renovation, relocation and opening of new branches every year. In 2012 BMO will have opened six new branches in the province. BMO is an active corporate citizen in Alberta. Recent major donations have been given to the University of Calgary Haskayne School of Business and the University of Alberta. The Bank also sponsors several community events and has been the Official Bank of the Calgary Stampede for over 100 years.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion as at April 30, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.