The city’s chief economist says dramatically lower oil prices mean Edmonton will close the year with negative economic growth but predicts a modest rebound next year.
John Rose said the city also saw a 0.4 per cent decline in Real Gross Domestic Product (GDP) and higher unemployment for 2016 than what was forecast in the spring.
“However, Edmonton should see modest growth in these areas for the remainder of 2016,” Rose said.
“The construction and manufacturing sectors in the Edmonton area were very weak over the summer. September and October indicators show activity in these areas have stabilized and with the rest of the economy continuing to grow at a slow pace, modest improvements will be noticed.”
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Rose expects the situation to improve in 2017.
“If energy prices improve, we will see a 1.8 per cent growth in overall GDP next year,” he said.
Rose added that he expects overall unemployment to remain high in 2017 at seven per cent.
Here are some of the highlights from the latest (October 2016) Edmonton Economic Update report:
Employment
- 7.7 per cent unemployment rate in September 2016
- Expected to be between 7.5 and 8.0 per cent in coming months
- Losses in construction/manufacturing jobs partially offset by job gains in retail, public administration, education
- Employment growth in 2017 to slowly bring unemployment rate down to 7-7.5 per cent for year
Inflation
- Inflation decreased in Q3 of 2016
- 0.6 per cent year-over-year inflation in September 2016
- Lower energy and shelter costs more than balanced higher food and clothing costs
- Housing costs, particularly rental costs, beginning to ease and will lead to very modest inflation for remainder of year
- Rental vacancy rate in 4.2 per cent range (well above recent low of one per cent), causing rents to fall
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Housing Starts
- Values to remain at relatively low levels for remainder of 2016
- Current rental demand expected to gradually catch up to stock of multi-family units and single-family home sales remain soft
- Housings starts expected to remain weak in 2017
- Rental vacancy rate of 4 per cent undercuts incentive to add to multi-family housing stock
- Inventory of new and existing single family homes increasing
- Builders, developers slowing rate of new house construction
Building Permits
- Total amount decreased significantly
- Both residential and non-residential values decreased
- Rental vacancy rates start to rise over remainder of 2016
- In 2017, permit levels will improve slightly as residential construction intentions firm up
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