Al­berta econ­omy do­ing bet­ter than ex­pected in June fore­cast, TD economists note

The Prince George Citizen - - Money -

CAL­GARY — En­cour­ag­ing data points are forc­ing economists to con­sider up­grad­ing their ex­pec­ta­tions for weak 2019 eco­nomic growth in Al­berta as the prov­ince con­tin­ues to re­cover from the ef­fects of ex­treme heavy oil price weak­ness late last year.

The pro­vin­cial econ­omy ap­pears to have started grow­ing again in re­cent weeks, based on stats show­ing ris­ing oil ex­ports by pipe and rail, stronger whole­sale and man­u­fac­tur­ing ship­ments and a jump in small busi­ness con­fi­dence, says a re­port from TD Eco­nom­ics re­leased Tuesday.

It also cites an im­prove­ment in the job­less rate and pos­i­tive pop­u­la­tion growth, along with more up­beat trends in Al­berta’s stalled re­tail sales and hous­ing sec­tors.

“All in all, re­cent en­cour­ag­ing data have added cre­dence to the view that eco­nomic growth in Al­berta is gain­ing some trac­tion,” the TD re­port says.

“While a con­tin­u­a­tion in this mo­men­tum would set the stage for a fore­cast up­grade, we re­main cau­tious for now.”

In its quar­terly pro­vin­cial fore­cast in June, the bank sug­gested the prov­ince’s econ­omy would grow by a “pal­try” 0.5 per cent this year and a slightly bet­ter 2.1 per cent next year.

It said the prov­ince’s man­dated oil pro­duc­tion cur­tail­ments that started in Jan­uary had suc­ceeded in strength­en­ing heavy oil prices in early 2019 but busi­ness and house­hold spend­ing re­mained ham­pered by con­cerns around medium-term en­ergy in­vest­ment.

Sim­i­larly, ATB Fi­nan­cial cut its 2019 growth ex­pec­ta­tions to 0.7 per cent in May from an ear­lier fore­cast of about 1.4 per cent, said Rob Roach, di­rec­tor of in­sight for the Al­berta gov­ern­ment-owned lender.

“It’s a bit of a mixed bag,” he said on Tuesday, cit­ing statis­tics in­clud­ing Al­berta’s re­cov­ery to a 6.6 per cent job­less rate in June from 7.3 per cent in Fe­bru­ary.

“There are def­i­nitely some signs of life but I think it’s too early to tell.”

ATB is more likely to in­crease its growth es­ti­mate than cut it, he con­ceded, in its next up­date in Au­gust.

The TD re­port ar­rives the day af­ter the Cal­gary Stam­pede an­nounced at­ten­dance at this year’s out­door ex­hi­bi­tion was 1.275 mil­lion, up about 4,200 from last year and sec­ond only to the event’s cen­ten­nial year to­tal of 1.4 mil­lion in 2012.

Roach said the rise in at­ten­dance is good news for the econ­omy but doesn’t nec­es­sar­ily in­di­cate a big change in con­sumer at­ti­tudes be­cause it could mean people are stay­ing in town to save money on a va­ca­tion.

The TD economists stopped short of an im­me­di­ate up­grade in their fore­cast, not­ing the volatil­ity of re­gional statis­tics and the newly elected United Con­ser­va­tive gov­ern­ment’s likely moves to re­strain pro­vin­cial spend­ing.

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