Alberta economy doing better than expected, say TD economists

Encouraging data points are forcing economists to consider upgrading their expectations for weak 2019 economic growth in Alberta as the province continues to recover from the effects of extreme heavy oil price weakness late last year.

The provincial economy appears to have started growing again in recent weeks, based on stats showing rising oil exports by pipe and rail, stronger wholesale and manufacturing shipments and a jump in small business confidence, says a report from TD Economics released Tuesday.

It also cites an improvement in the jobless rate and positive population growth, along with more upbeat trends in Alberta's stalled retail sales and housing sectors.

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"All in all, recent encouraging data have added credence to the view that economic growth in Alberta is gaining some traction," the TD report says.

"While a continuation in this momentum would set the stage for a forecast upgrade, we remain cautious for now."

In its quarterly provincial forecast in June, the bank suggested the province's economy would grow by a "paltry" 0.5 per cent this year and a slightly better 2.1 per cent next year.

Factors include curtailments

It said the province's mandated oil production curtailments that started in January had succeeded in strengthening heavy oil prices in early 2019 but business and household spending remained hampered by concerns around medium-term energy investment.

Similarly, ATB Financial cut its 2019 growth expectations to 0.7 per cent in March from an earlier forecast of about 1.4 per cent, said Rob Roach, director of insight for the Alberta government-owned lender.

"It's a bit of a mixed bag," he said on Tuesday, citing statistics including Alberta's recovery to a 6.6 per cent jobless rate in June from 7.3 per cent in February.

"There are definitely some signs of life but I think it's too early to tell."

ATB is more likely to increase its growth estimate than cut it, he conceded, in its next update in August.

Stampede attendance up

The TD report arrives the day after the Calgary Stampede announced attendance at this year's outdoor exhibition was 1.275 million, up about 4,200 from last year and second only to the event's centennial year total of 1.4 million in 2012.

Roach said the rise in attendance is good news for the economy but doesn't necessarily indicate a big change in consumer attitudes because it could mean people are staying in town to save money on a vacation.

The TD economists stopped short of an immediate upgrade in their forecast, noting the volatility of regional statistics and the newly elected United Conservative government's likely moves to restrain provincial spending.