Al­berta tops B.C. to re­claim lead in growth sur­vey

National Post (National Edition) - - FINANCIAL POST - GREG QUINN

OT­TAWA • Al­berta’s econ­omy is more than just back on its feet, it’s about to run faster than any other re­gion in Canada.

Gross do­mes­tic prod­uct in the western prov­ince will rise by 2.9 per cent this year, ac­cord­ing to a Bloomberg sur­vey of economists, up from an April es­ti­mate of 2.5 per cent. That matches fore­casts for neigh­bour­ing Bri­tish Columbia, and in 2018 Al­berta comes out on top with a 2.4 per cent ex­pan­sion that would be tops among Canada’s 10 prov­inces.

It’s a huge come­back from Al­berta’s last-place fin­ish in each of the last two years when oil prices plum­meted be­low $50 a barrel, trig­ger­ing lay­offs and an in­vest­ment freeze that shrank GDP by about four per cent. The re­bound is an­other sign Canada may re­tain its top spot among Group of Seven na­tions as eco­nomic growth di­ver­si­fies away from con­sumer spend­ing.

“Every­one should feel good about it, not just Al­berta,” Bank of Nova Sco­tia deputy chief economist Brett House said by phone Wed­nes­day from Toronto. “The Cana­dian econ­omy is fir­ing on all cylin­ders.”

Growth fore­casts for this year were lifted in ev­ery prov­ince in the lat­est Bloomberg sur­vey that was taken July 7-14. The 2018 sur­vey shows growth is fore­cast for ev­ery prov­ince, which would be the first time that’s hap­pened since 2011.

Al­berta still stands out as the big­gest sur­prise con­trib­u­tor.

Fac­tory sales in Al­berta have climbed 18 per cent in May from a year ear­lier. Re­tail sales are up nine per cent as un­em­ploy­ment fell to 7.4 per cent in June from a peak of nine per cent in Novem­ber, and as govern­ment deficit spend­ing gives house­hold bud­gets a boost. Av­er­age weekly wages rose on a 12-month ba­sis by the most in more than two years with a gain of 1.7 per cent, Statis­tics Canada re­ported Thurs­day.

Those gains come on top of an en­ergy in­dus­try where oil and gas drilling is ris­ing again as com­pa­nies low­ered their break-even costs. To date, the av­er­age num­ber of ac­tive Cana­dian oil rigs is nearly dou­ble what it was a year ago, and Al­berta con­struc­tion is also be­ing aided by re­build­ing af­ter wild­fires last year.

New­found­land and Labrador, an­other prov­ince tied to oil through off­shore drilling, is now ex­pected to grow 0.8 per cent next year in­stead of the 0.1 per cent con­trac­tion economists pro­jected in April.

“You re­ally are see­ing more con­sis­tent growth, which I think is bet­ter from a na­tional per­spec­tive,” said Michael Dolega at Toronto-Do­min­ion Bank. “It makes things eas­ier as far as pol­icy-mak­ers are con­cerned, es­pe­cially for the Bank of Canada.”

Gover­nor Stephen Poloz raised in­ter­est rates for the first time in seven years on July 12 cit­ing a broad re­cov­ery and in­vestors pre­dict an­other move in Oc­to­ber. One com­pli­ca­tion that could arise would be if a ris­ing Cana­dian dol­lar and bor­row­ing costs took a big hold on weaker re­gions of the econ­omy.

The full re­cov­ery in Al­berta still has some ways to go. Even if out­put grows as economists ex­pect in 2017, the prov­ince’s gross do­mes­tic prod­uct would re­main about 5 per cent lower than its peak in 2014, be­fore oil prices col­lapsed. And the job­less rate was reg­u­larly less than five per cent be­fore the oil crash.

“It’s been a stronger bounce back than peo­ple were ex­pect­ing but it’s still not a full re­cov­ery yet,” Nathan Janzen, se­nior economist at Royal Bank of Canada, said by phone from Toronto. Royal Bank boosted the Al­berta growth call for this year to 2.9 per cent from 2.1 per cent, the most among the 11 re­sponses in the Bloomberg sur­vey.

BRENT LEWIN / BLOOMBERG

Pedes­tri­ans pass Fifth Av­enue place in Cal­gary. Gross do­mes­tic prod­uct in Al­berta will rise by 2.9 per cent this year, ac­cord­ing to a Bloomberg sur­vey of economists.

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