Haves and have-nots
Alberta is deep into hard economy times, while British Columbia enjoys boom times, a new study says.
But the Conference Board of Canada’s new forecasts for unemployment and income are the ones that really bring the story home for much of the country.
Where economic growth is concerned, Alberta is projected to lag the country in the wake of the oil shock, with a contraction of 0.7 per cent this year but a modest bounce of 1.1 per cent in 2016, the group said in its report on the provinces today.
Saskatchewan is suffering, too, it noted.
British Columbia will lead Canada this year as the only province whose economic growth will top 3 per cent, though Manitoba will take the crown next year.
But for some pockets, much of the country will continue to feel the sting of elevated unemployment and weak income growth, the Conference Board report said.
Indeed, Canada’s jobless rate will hold above 6.5 per cent this year and next, while the increase in per-capita household disposable income falls to 1.5 per cent this year from 2.3 per cent in 2014, before perking up next year to 2.4 per cent.
The Conference Board warned of “soft employment growth, weak wage gains, the high level of household debt, easing real estate markets, and the threat of job losses in oil-rich provinces,” which will eat into consumer spending this year.
“In addition, the economy is unlikely to get much of a boost from government spending,” it added.
“Even before the decline in oil prices, the federal and provincial governments were planning to maintain a significant degree of spending restraint. Now, with oil prices taking a bite out of revenue growth, an even greater level of restraint is expected.”
The forecast called for “another poor performance” on the labour front, with just 172,000 jobs created this year, though 218,000 in 2016.
Canada’s jobless rate will peak at 6.8 per cent by the end of this year, easing slightly to 6.5 per cent by the end of 2016.
Unemployment this year will range from a low of 4.6 per cent in Saskatchewan to a high of 12.5 per cent in Newfoundland and Labrador, according to the projections.
But note that the forecast for Saskatchewan marks hefty jump from 2014’s 3.8 per cent.
Alberta, too, which has already seen a spike in unemployment, will see its jobless rate at 5.6 per cent this year and 5.8 per cent in 2016, compared to just 4.7 per cent last year.
Only British Columbia will see household disposable income growth top 2 per cent this year on a per-capita basis.
The numbers for Alberta really tell the story, with a projected gain of just 0.6 per cent this year and 1 per cent next, compared to 3.4 per cent in 2014.
Total inflation, meanwhile, may be low now, but some of that’s going to change when the impact of the oil shock on consumer prices fades.
So-called core inflation, which strips out volatile items, is above 2 per cent and is expected to remain there. The Bank of Canada said just yesterday that the “underlying trend” of inflation is 1.6 per cent to 1.8 per cent.