Well hopefully my last blog regarding Alberta's economic situation was as much fun reading as it was writing. I can't think of anything more fun to do than reading economic statistics, well except maybe watching molasses pour. Since we all acknowledge the exciting nature of economics why not a second helping? Here we go, and once again I am borrowing directly from the daily economic updates of Todd Hirsch of Alberta Treasury Branch. Todd is a sought-after speaker as he is very knowledgeable and has a great sense of humour. He recently changed the name of his daily post to "The Owl" in case you want to google it. I have no idea why it is now called the owl but I am sure there is some cryptic and incredibly astute reason. So let's delve into it, and again most of the additional comments and interpretations are mine (and hopefully right!)
Retail wages have always been low as it is a relatively unskilled sector and many also earn tips. Interestingly retail wages have grown across Canada at a rate somewhat less than inflation since around 2000. Alberta's retail wages have fared better but only recently have caught up to the rate of inflation. Even though Alberta's retail workers have fared better than other Canadian retail workers, I suspect after we factor in Alberta's cost of living compared to the rest of Canada, they are probably not doing any better than other Canadians. So be kind when tipping! And speaking of unappreciated sectors...
Arts and Culture Employment
Arts and culture employment in Alberta has been steady at around 45000 for the last few years. While these are generally part-time and lower paying jobs, they provide some unappreciated benefits to our society. The part-time jobs provide work for young folks entering the work force and mature folks looking for a more relaxed part-time job. Just as important, what fun would life be without Heritage Days, our many festivals, sports teams, and all our cultural and recreation activities? So did I mention be kind when tipping?
Exports have always been a big part of Alberta's economy and energy exports a big part of that big part. And the value of those exports have been lagging a bit lately, but not to worry just yet. There are various factors at play for any economic indicator and the current lag is attributable to two factors which change regularly. Many have heard the lament about how Alberta's "Western Canadian Select" oil prices are currenlty significantly lower than "West Texas Intermediate" prices due to pipeline problems, politics, etc. Well the gap has narrowed recently so that will help our lagging exports. Additionally many refineries are down for seasonal maintenance so when they come back online, production will increase and exports should rise again...until the next inevitable blip.
Building Permits Issued
One factor the public so often overlooks when trying to figure out what is going on, yet is such an important indicator is the value of building permits issued by a municipality. It kind of reminds me of two economic indicators "public confidence" and "public spending". Public confidence is how confident the public is about their economy, and public spending is the public putting their money where their mouth is. Building permits issues is the same thing, somebody has decided to spend some money.
In Alberta the value of residential and non-residential permits issued have been rising steadily over the last year and sat at $1.4 Billion in June, up 15.9% over the year.
Canadian economists received a small surprise last week (not uncommon in economics) when the job market came in weaker than expected. They predicted Canada's employment would rise by 6000 jobs and they found it dropped by 39,000. Surprise.
Alberta however, is proving a little stronger. Along with Saskatchewan our job market grew, theirs by 3.9% and ours by 3%. We gained 16,000 jobs in July for a total of 2.217 million workers in the province.
An additional bonus is that most of our new jobs have been in non-traditional sectors - professional, scientific and technical services, retail and wholesale trade, and information, culture and recreation - which increases economic diversity, and these positions have been good quality ones with nearly 89% being full-time.
Shortage of Workers
With such a robust job market, Alberta has been by far the largest employer of foreign workers out of all provinces in Canada. We employ some 84,000 foreign workers with Ontario coming in a distant second with just under 50,000.
Needless to say the largest employment of foreign workers is in the food and accommodation sector with nearly 32,000 of the 84,000. This also raises valid questions about the long-term viability of keeping so many foreign workers in the province.
So there you have it, again mostly good news.But economics is never that simple.
With the apparent advent of the "global village" the economies of the various countries are becoming more and more intertwined. As the news media so enjoys dwelling on the negative, we all know too well how fragile the economies of Europe and the US are, with their unfathomable deficits and debts. On the good side, we appear to be in the trough and the US is showing signs of slowly coming around and Europe beginning to address their problems also.
I remember a couple years back being at a Realtors Association of Edmonton economic forecast breakfast and one of the speakers put it so eloquently "enjoy the party but dance close to the door". While things are a little less volatile than they were back then I think the same advice still applies. Get out there, do some business and make some profits, but keep your fallback position a safe one. Overextending on credit is never a safe strategy but it may even more so not be an advisable course of action in this environment. Just one man's opinion!