Alberta would do better than other provinces in recession, says report
Rising hydrocarbon prices would lessen the shock of a possible recession in Alberta compared to other Canadian provinces (archives).
Alberta would resist better in the event of a recession thanks in particular to prices energy, which would lead to more labor requirements. These are the key findings of the Alberta Business Council report on the outlook for the Alberta economy for 2023.
The report was written by Alicia Planincic, Economist and Policy Manager at the Alberta Business Council, and Mike Holden, Alberta Business Council Vice President and Chief Economist.
The authors cite several reasons that suggest that Alberta would be less affected by a possible recession. First, the labor market in 2023 is in a stronger state than it has been in years, they write in the report's summary. Job growth has been strong and the gap between Alberta's unemployment rate and the national average has narrowed.
Second, 72% of inflation in Alberta is attributable to global forces that are likely to moderate, they say. In addition, prices for energy resources, which are the backbone of Alberta's economy, are likely to remain high [thus] continuing to drive economic growth in the province.
Third, according to the report, Alberta businesses remain optimistic and even plan to increase investment, despite successive interest rate hikes by the Bank of Canada.
< p class="e-p">On rising oil and gas prices, Alicia Planincic expects this to fuel labor demand. Oil and gas production rose 5.3% and 2%, respectively, year over year. Prices, although down from their peak at the start of last year, remain high.
The agricultural sector, one of the pillars of province's economy, also saw a sharp increase in grain production of 70% in 2022, following a poor harvest due to extreme drought in 2021.View larger
Data are from the Alberta Economic Dashboard and Statistics Canada.
An expected increase in labor demand, driven by rising hydrocarbon prices, would in turn allow Alberta to catch up with other provinces in wage growth, says Alicia Planincic.
Wage increases for Alberta employees have lagged behind the rest of Canada over the past year, she said. This has resulted in a decrease in the purchasing power of Alberta workers when inflation is taken into account. But this situation should change in the coming months, she predicts.
With an unemployment rate of 5.8% and a vacancy rate of 5.1%, this means there are 1.1 job seekers for every job opening in Alberta. This represents a huge shift from recent years.
Alicia Planincic says 2023 could well be the year for employees to take advantage of the job market and demand more work. #x27;money. Most of our companies say they want to increase their workforce [so] they are going to have to attract workers who already have a job. And to do that, you need a higher bid.
With information from Rob Easton