It’s a New Year…so where are we going now? That is the question that many SEBA (South Edmonton Business Association) members were asking at the start of 2017. SEBA was pleased to have John Rose, Chief Economist for the City of Edmonton, speak about how he saw 2016 play out and how 2017 will be a positive change.
The City of Edmonton proper saw economic growth right up until the summer of 2016. This is in contrast to Metro Edmonton which has seen a recessionary environment for the last 2 years.
In terms of certain key areas of the economy, John gave us his analysis.
Employment: Edmonton has seen growth in its labour force over last year which has helped to increase the unemployment rate. Many of the recently lost manufacturing jobs won’t be coming back to the region. For 2017, the unemployment rate is expected to slightly increase.
Inflation: We have had low inflation for a considerable period of time but that will end. It is expected that inflation will increase to the 2% range due to the increase in energy prices. Overall, this doesn’t help the Edmonton economy because Edmonton is viewed as being an expensive place to have a business.
Construction: A recovery has already been seen in residential construction, except for multifamily residences (condos and apartment buildings). Commercial construction is a concern since there are no major projects being planned while the Anthony Hendey and Rogers Place have been completed. The largest concern in construction for 2017 will be in the commercial area. What big projects will progress? Will the province decide to continue with Phase 2 of the North West Refinery Partnership?
Property Values: Property values have held steady but are expected to decrease in 2017. The largest risk will be with condos due to the anticipated increased inventory available on the market. Landlord won’t be able to increase their rent in 2017 but possibly in 2018 by 2-3%.
Canadian Dollar: A lower Canadian Dollar is expected for 2017 which will help to insulate the Oil Patch. Manufactures will also be able to use the low Canadian Dollar to increase their exports to foreign countries.
General Economy: Metro Edmonton has seen a recession over the last two years but a modest recovery is expected for 2017. There is a very large opportunity for companies that provide professional services, and more specifically, engineering and project management services. Keep your balance sheet clean as interest rates are expected to increase in 2017. Growth is expected to be around 1-2% per year with oil not forecasted to hit $80/barrel until 2023 at the earliest.
The next SEBA lunch is a joint venture with the Old Strathcona Business Association. We will be looking at how business can fight poverty and make a difference in the community.