Alberta's growth unprecedented in Canada

ROMA LUCIW ,  Globe and Mail Update

If it looks as if things have never been this good in Alberta, it's because they haven't.

Oil-rich Alberta is enjoying the strongest period of economic growth ever experienced by any Canadian province, according to a Statistics Canada study released Thursday.

Record oil prices, along with surging demand for energy and the perception of a dwindling global supply have created the conditions for the hottest economy in the country. Alberta's nominal gross domestic product jumped 43 per cent between 2002 and 2005, and there is no sign of slowing down in 2006.

The ”unprecedented” economic boom has left Alberta with the lowest unemployment rate of any province in Canada — or any state in all of North America, Statscan said in a study published in the Canadian Economic Observer.

Globally, the frenzied economic expansion in Alberta is almost as strong as in China, which has the fastest rate among the world's large economies. Since 2002, China has posted 14.8-per-cent average annual growth, compared with a 12.7-per-cent average in Alberta.

”But, while China's growth was mostly volume, Alberta's was mainly driven by higher export prices,” Statscan said.

On a per capita basis, Alberta's GDP hit $66,275 last year, nearly double the average income 10 years earlier and 56 per cent above the national average. The deviation from the national average is the largest yet posted by a Canadian province.

Meanwhile, The Conference Board of Canada predicted Thursday in its autumn outlook that Calgary will lead Canadian cities in economic growth this year. Calgary's economy is expected to expand by a ”stunning” 6.6 per cent in 2006, compared with a national growth rate of 3.1 per cent, while job creation is on track to reach 7 per cent.

In 2007, the board expects job growth will moderate and employment will rise by a ”still healthy” 1.9 per cent, creating another 12,100 jobs in the Calgary area. ”However, the increase in labour force growth is expected to outpace that of employment next year, lifting the unemployment rate to 3.7 per cent.”

In the short term, the Statscan report paints a picture of a labour situation that remains very tight. Lured by average hourly earnings that have surpassed Ontario and now lead the country at $20.94, Alberta's population is expanding at a breathtaking pace.

The province's population has grown faster than every other province since 1996, Statscan said. The growth is being fuelled by inflows of migrants from other provinces and a rising birth rate. However, relatively few immigrants choose to move to Alberta, gravitating mostly to Toronto, Vancouver and Montreal.

Alberta has the youngest as well as the fastest-growing adult population. In 2005, 57 per cent of Albertans were under the age of 45, in part because migrants moving to the province in search of work tend to be relatively young, Statscan said.

In the last decade, the province's labour market has been the star performer in Canada. When adjusted to a comparable basis with the United States, Alberta's 2.9-per-cent unemployment rate in June was the lowest of any province or state in North America, while it had the highest employment rate at 71.7 per cent.

”In the northeastern part of the province (which includes the oilsands), one in every five workers is employed by the oil and gas industry,” Statscan said.

But not all of the jobs in the province are in the energy field. Since 2002 and 2005, jobs in the mining sector have jumped by 30,000 or 33 per cent, and by 71 per cent since 1999.

The rapid economic expansion has led to a scarcity of labour, with one-quarter of Alberta's manufacturers saying they scrambled to find unskilled workers last year. In part, relatively low-paying work in farming, manufacturing, accommodation and food are being siphoned off by the booming construction and mining sectors.

The prosperity has created some ”worrisome long-term” effects, Statscan said. Rural Alberta now has one of the highest rates of high school drop-outs in the country at about 25 per cent, presumably spurred by the promise of attractive pay for relatively unskilled work. ”However, this leaves these youths ill-prepared to deal with the consequences of a slowdown in growth.”

The higher earnings, along with a migration of people, has lead to an unprecedented housing boom in the province. Demand surged 17 per cent last year, with housing starts in Alberta recently surpassing Quebec, despite having less than half its population. Shortages of homes have sent new housing prices soaring in 2006.

Companies in Alberta is pulling in record earnings, driven by soaring crude oil prices and gas exports. The profit more than doubled to $53.1-billion in 2005 from $23.5-billion in 2002. Alberta companies accounted for 27 per cent of all profits in Canada in 2005, nearly double its share of national GDP.

The surge in corporate profits have led to a 37-per-cent jump in business investment over the last three years, with a majority of the growth taking place in the oil sands mega-projects unfolding north of Edmonton.

”The investment boom shows no sign of ending anytime soon,” Statscan said.

Albertans are spending money at the fastest pace in Canada, with retail sales running an ”astonishing” 17 per cent ahead of 2005, on track for the best year of any province on record.

Despite the splurge in spending, Albertans are putting some of their money in the bank. The province has the highest personal savings rate in Canada — 5.1 per cent last year. The only other province where the savings rate is not negative in Ontario.