'Don't panic': Edmonton's chief economist forecasts modest growth in 2017
'It’s a good time to spend if you’ve got a little bit of money in your pocket'
Edmonton can look forward to a modest growth rate of 1.8 per cent and low inflation next year, says John Rose, chief economist for the City of Edmonton.
"What's driving the growth is further employment gains in education, health care, financial services, tourism," Rose said during a year-end interview with CBC News. "The consumer side of the economy — retail — continues to do reasonably well in Edmonton."
Rose also predicted a better year for manufacturing services in the Edmonton area in 2017.
"You'll see an uptick in activity in the Niskus of this world," he said.
"We've seen a number of projects in the energy sector that had been cancelled [in 2016]. They've been restarted and that's going to have a pretty quick impact on manufacturing activity because the engineering and design work has already been done."
Rose also pointed to new activity like the Valley Line LRT and the redesign of Yellowhead Trail.
"All those are going to have a fairly quick impact on professional services, particularly engineering and design, so those will do quite well," he said.
Non-residential construction a question mark
Rose said Edmonton may not see as much activity in non-residential construction next year as it did in 2016.
New projects are being announced, but he wonders if they are going to come -on-stream quickly enough to compensate for other projects which are just wrapping up.
They include the recently completed Rogers Place downtown arena, some commercial towers that are approaching completion, the Walterdale bridge, the new provincial museum and "most importantly, the Redwater upgrader," he said.
"That's going to leave a big hole on the non-residential side of the construction sector in Edmonton."
Rose said he expects to see Edmonton housing prices stay relatively stable. Rental accommodation may even get a little cheaper.
Developers and house builders may not see a banner year, although it will be better than 2016, he said.
"I'm anticipating that the residential construction, which took a big hit in 2016, particularly multi-family, is going to continue to contract — nowhere near the contraction we saw in 2016, but you'll see housing starts come down again, maybe another three per cent or so in 2017."
Unemployment will rise, and that's OK
Rose said he believes the unemployment rate in Edmonton will rise next year but he said that's actually good news.
He said Edmonton's unemployment rate has stayed low because so many people gave up looking for work in 2016.
"So as soon as we get into 2017, as soon as we see the economy start to turn around — and that will be in the first quarter of 2017 — you'll see, I think, a number of these people move back into the labour force and that's going to cause the ...unemployment rate to move up," he said.
"So people shouldn't get too spooked about rising unemployment levels in Edmonton. Don't panic.
"It's rising for the right reason- that people perceive opportunity and they're moving back into the labour force. Underneath that there will be employment growth, but very slow growth, not enough to absorb all those people but there will be growth and that's the good news in 2017."
Rose also said it will be a good year for consumers to spend — cautiously — because low inflation means a dollar will go further..
"Buy that car," he said
"If you're going to get your wiring redone, do it now.
"It's a good time to spend if you've got a little bit of money in your pocket."