Recession to persist in Calgary, Edmonton as oil woes continue: Conference Board of Canada

Both Calgary and Edmonton can expect the recession to continue in 2016, the Conference Board of Canada predicts.

Low oil prices will shrink economies and drive up unemployment in both cities in 2016

The Conference Board of Canada says both Calgary and Edmonton can expect their economies to remain in recession in 2016 because of the downturn in the energy sector. (Gregory Bull/Associated Press)

Both Calgary and Edmonton can expect the recession to continue in 2016, the Conference Board of Canada predicts.

Calgary's economy will contract another 1.2 per cent and Edmonton's will shrink a further 1.3 per cent, according to the non-profit economic forecasting group's winter 2016 report.

"The dramatic decline in oil prices continues to weigh on both cities' economies, and weak activity in the energy industry is spreading to other sectors," Alan Arcand, associate director of the board's Centre for Municipal Studies, said in a release.

Calgary's real GDP contracted 2.4 per cent in 2015 while Edmonton's contracted by 1.8 per cent.

In Calgary, employment will decline 2.1 per cent this year, pushing the unemployment rate to 7.5 per cent — topping the national average for the first time since 1987, the board predicts.

"The belt-tightening around the oilpatch, it has big multiplier effects on the economy ... it's the construction economy, it's the trade workers, and those folks are getting hit," said Pedro Antunes, the board's deputy chief economist.

Manufacturing and construction sectors hurting

Edmonton's unemployment rate is also expected to keep going up, hitting an almost 20-year high of seven per cent.

After a year of double digit output declines in Calgary's manufacturing and construction sectors, the board predicts more of the same for 2016.

Manufacturing output will decline another 7.9 per cent in 2016, and construction output is forecast to fall by a further 6.7 per cent, the board predicts.

And because layoffs in the oil industry have created a glut of office space, new investment in office buildings and non-residential construction will be discouraged, the board says.

Housing starts in Calgary are forecast to fall by 18 per cent in 2016. In Edmonton, the board predicts an a one-third decline in housing starts.

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