A closer look at ATB economic outlook
With the province now halfway through a thus-far turbulent year, ATB Financial has released its economic outlook for the forthcoming third quarter.
Providing “the most up-to-date portrait of the province’s economy” and ATB’s best estimate of what we can expect for the remainder of this year, the latest outlook shows that, at the very least, this year won’t be the worst economic year in our recent history.
“While some forecasters continue to call for a recession in Alberta, ATB Financial remains confident that our province will see some growth this year (albeit small),” said ATB economist Nick Ford.” But despite the differences in opinion, all of the major forecasts for the province have one thing in common; economic expansion is expected to hover around zero per cent this year.”
After posting the slowest rate of growth since 2010 in the first quarter of 2015 with 6,732 new migrants, ATB is expecting in-migration to the province to slow through the remainder of the year. As a result, the number of new Albertans arriving via in-migration is expected to fall from 75,000 in 2014 to between 36,000 and 40,000 in 2015.
With Alberta’s housing market reacting “reasonably well” to the current economic conditions, builders began construction on 34,000 homes (based on seasonally adjusted annualized rates – SAAR) in May. Over the summer, new home construction is expected to dip, resulting in between 30,000 and 35,000 starts SAAR per month for the remainder of the year.
Oil and Gas
With so many variables impacting the worldwide price of oil and prices fluctuating by as much as $2 and $3 US in a single day, any bet on where things will end up is uncertain at best. With current prices hovering just under $53 per barrel, ATB expects prices to continue to fluctuate over the summer before rebounding back to $ 60 per barrel by year-end.
Despite dire headlines and reports of mass layoffs in the energy industry, Alberta has actually added 38,000 jobs in the last 12 months. Looking further into 2015, ATB is forecasting the province’s unemployment rate to remain relatively stable, moving from the 5.8 per cent reported in May to an average of six per cent throughout the remainder of the year.
ATB’s revised forecast pins annual real gross domestic product (GDP) growth at 0.4 per cent, the weakest in six years. The rate has been reduced from bank’s second-quarter growth rate outlook of 0.8 per cent, which was released on March 31. The province’s GDP is expected to rebound to 1.8 per cent in 2016, with a further recovery to 2.3 per cent in 2017.