Edmonton OK for now despite oil cutbacks, city's chief economist says
John Rose hopes other sectors will pick up slack from slumping energy sector
Edmonton's chief economist predicts the city's economy will hold its own, at least for the time being, despite mandated provincial cuts to oil production announced last week by Premier Rachel Notley.
"The impact won't be immediate," John Rose told reporters Thursday after he presented his economic outlook to the Economics Society of Northern Alberta.
Rose said Edmonton's strong health care, education, and public administration sectors don't fluctuate as much as the energy sector.
He said the job market in Edmonton continues to grow, while Calgary's unemployment is over eight per cent, higher than the national average and Edmonton's rate of about six per cent.
"I'm hoping that's going to persist with the slack being taken up by other sectors of the economy," Rose said of Edmonton. "So Calgary's taking it in the teeth right now."
However, if oil production is curtailed over a longer term, it will affect Edmonton as a logistics centre for transportation, warehousing and manufacturing, Rose said. "A lot of the fabrication that goes into products used by the energy sector are actually fabricated here."
Rose said Edmonton's gross domestic product [GDP] is expected to dip in the first part of 2019
He also noted Edmonton shouldn't expect to see the same levels of growth as in 2014, when the city saw six-per-cent real GDP growth. The oil-price plunge that started that year led to negative growth in 2015 and 2016.
"We're talking the 2030s before we get back to levels of GDP per capita — levels of overall wealth available to support an individual citizen that we had in 2014," Rose said.
Rose also noted that the housing market in Edmonton has been softening.
Michael Thompson, president and CEO of the Realtors' Association of Edmonton, said there's more housing inventory this year than last.
Thompson said it is taking seven to 10 more days to sell a home this year than it did in 2017.
"People don't have as much money as they used to have to buy a house," he said.
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Rose projects the housing market will improve, but Thompson said he'll wait and see.
"I would approach that projection with some caution. I think we have to see how the market evolves in the first and second quarter."
He also blamed new federal rules on mortgage eligibility for the drop in housing sales.