Business owners and consumers have positive outlook
From business owners to consumers, there is a spring in most people’s steps these days, an upbeat mood about the Alberta economy despite some turbulent economic waters elsewhere in the world.
On Tuesday, a report by BMO Economics said Alberta’s economy continues to outperform amid rising oil production and accelerating inward migration. The report said the province will sit atop the Canadian leaderboard this year, with growth hitting 3.5 per cent before falling back slightly to 2.9 per cent in 2013. In Canada, GDP growth is expected to hit 2.2 per cent this year and 2.0 per cent next year.
“The energy sector remains the key driver of economic activity in the province, with crude bitumen production up 16 per cent year-over-year through the first half of the year, and the Energy Resources Conservation Board expecting oilsands output to more than double by 2021,” said Robert Kavcic, economist with BMO Capital Markets.
Recent surveys by PwC and the Canadian Federation of Independent Business have painted a rosy mood for Albertans.
There’s no surprise there when you take a look at the latest economic indicators.
Alberta has the lowest unemployment rate in the country at 4.4 per cent. The province has the highest average weekly earnings in the country at $1094.85. Sales in restaurants and bars reached a record $653 million in July. Retail sales of $5.7 billion in July were up 9.2 per cent from a year ago, the highest year-over-year growth in the country.
Auto sales have increased by 11.2 per cent this year. Calgary’s resale housing market topped all major Canadian markets in August with the highest annual growth rate of 15.3 per cent.
“As a consumer, I am extremely confident in making purchases. I feel our economy has bounced back and buyer confidence is back including my own,” said Tanya Eklund, who works as a realtor in the city. “There have been some alarmist reports come out about Canada’s economy and a decrease in market stability over the next few years. I see Alberta and Calgary specifically contrary to this. Our unemployment rate is low . . . I am optimistic about our economy because the people around me are also portraying optimism and I can see that when I go to the malls and out for dinner.
“People including myself are spending and I believe it is because we are in a stable and growing market not just in real estate but overall. Next year, Nordstrom is coming to Chinook Centre where the Sears is now. They are a high-end retail shopping store. We are the first in Canada to have this store over Toronto and Vancouver which I believe speaks volumes to our economy. A company like Nordstrom would not take a huge risk setting up shop if they were not confident in our economy and that puts a smile on my face.”
The latest PwC survey has put a smile on many people’s faces. It indicated overall consumer confidence in Alberta has regained momentum after a temporary dip in July and the year-to-date consumer confidence index continues to be higher than the previous year. Consumers are also more likely to buy major household items accompanied by an expected increase in household income. And the propensity to buy a house has also steadied following a decline in July.
Greg Stahl, president of New West Truck Centres, said he has a lot of confidence in Alberta compared with the rest of Canada.
“I think we’re kind of an island of isolation as far as economic prosperity is concerned,” he said. “There’s a lot of uncertainty across North America but as a businessman I can’t think of a better place to be than Alberta. The activity. You can feel the energy. Our numbers year-over-year are up significantly.
“It seems to be same story — a consistent story across the province.”
Zameel Bharmal, of Air Pac Enterprises which is a sand blasting coating facility in Calgary with 20 employees, said business in the province is really steady.
“There’s a lot of work up and coming for us,” he said. “I believe this last quarter things are looking up for probably everybody right now including myself.
“The oilpatch is strong because the price for crude oil is still up. There’s more stability. More work coming our way.”
But the biggest issue for many business owners in Alberta remains finding the right labour. And that could hinder economic growth in the future and trickle down to eroding confidence levels as well.
“Just trying to find the right people to work for you is very hard to come by,” said Bharmal.
Adam Legge, president and chief executive of the Calgary Chamber of Commerce, said the biggest issue right now for any size business is labour.
“That’s No. 1 no matter what industry, what size, whether downtown or outside of downtown,” said Legge.
“I think there’s a general cautious optimism but I still think people read the newspapers every day and see things going awry in the States or Spain or Europe or where have you. But I think they also recognize that Alberta is well poised, well positioned compared to the rest of Canada and the world and so have a bit more optimism.”
By Mario Toneguzzi, Calgary Herald October 9, 2012
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