Local economy predicted to slump

Red Deer’s economy will shrink this year because of slumping oil prices, predicts the Conference Board of Canada. However, city and Red Deer Chamber of Commerce representatives are more bullish on the local economy.

Red Deer’s economy will shrink this year because of slumping oil prices, predicts the Conference Board of Canada.

However, city and Red Deer Chamber of Commerce representatives are more bullish on the local economy.

Mayor Tara Veer said in a statement on Tuesday it’s not surprising that the oil and gas industry’s challenges are having a local impact. However, she finds much room for optimism.

“A strong year ahead, including new regional schools being built, public infrastructure being planned and events with strong economic spinoff coming to our community, will no doubt give our economy a healthy boost.”

The conference board released its Mid Sized Cities Outlook 2015 on Tuesday and it predicts this city’s economy will contract by 1.2 per cent, cutting employment by 3.6 per cent and raising unemployment to 6.7 per cent. In Medicine Hat, growth is expected to edge by a slim 0.4 per cent. Lethbridge will do a little better at 1.1 per cent growth.

“The dramatic drop in oil prices has hit Alberta hard, and Red Deer and Medicine Hat are no exception,” says Alan Arcand, associate director for the conference board’s Centre for Municipal Studies.

“However, economic growth should pick up next year as oil prices begin to recover.”

Medicine Hat and Lethbridge will fare a little better than Red Deer this year, largely buoyed by strength in their agriculture sectors, says the report.

Construction is expected to be among the hardest hit segments of the Red Deer economy, with a 13 per cent drop predicted this year, followed by a 3.2 per cent contraction next year.

Manufacturing will see only a razor-thin 0.1 boost this year, say conference board number crunchers.

In 2016, Red Deer is forecast for 1.5 per cent growth and 0.6 per cent job growth.

Red Deer Chamber of Commerce executive director Tim Creedon said he can’t speak to the specific numbers in the conference board report, but the evidence is clear that the oil and gas industry — and the many local service companies that serve it — are feeling the pinch.

“I wouldn’t argue with what I read in that report about our natural resource sector. It’s facing some challenges at the moment.

“We have a very strong service sector in the natural resource part of the economy. So when oil prices are where they are, we can expect some degree of correction.”

Among the signs all is not well is the increased number — and the frequency of oil and gas backgrounds — of applicants for open jobs.

“There’s no question there’s some contraction going on there.”

Creedon is less convinced by the construction forecasts.

Local home builders have had a good spring, are expecting it to continue through the summer before slowing in the fall and winter.

Some sectors in commercial — hotels and strip malls — are still very busy.

“It’s a very mixed picture depending on what type of market you’re in.”

City of Red Deer Land and Economic Development Department manager John Sennema is also a little surprised by the conference board’s predictions of a reversing economy and hard-hit construction industry.

“Everything anecdotally I’m hearing isn’t saying that to me,” he said. “That’s why I’m a bit surprised.

“Certainly we anticipated a little bit of a slowdown (and) we’ve seen that.”

Sennema said local firms are painting the current climate in terms of an “adjustment” rather than a full-on contraction.

Commercial building permits are up, construction is going full speed in Clearview and in Timberlands. While home building and industrial development in the Queens Business Park have slowed a little, there is still plenty of activity.

“You know what — it’s a forecast,” he said of the conference board numbers. “I’ll be surprised if it is that dramatic.”

While Alberta has been hardest hit by the oil prices tumble, the rest of Canada is feeling the pinch as well.

The country’s real gross domestic product declined for the fourth consecutive month in April, dropping by 0.1 per cent, said Statistics Canada in numbers released on Tuesday.

Goods production fell by 0.8 per cent, a symptom of contraction in mining, quarrying and oil and gas extraction.

“The oil shock continues to reverberate through the Canadian economy, in all its various forms,” says Doug Porter, chief economist with BMO Capital Markets.

Also declining were retail trade, and the finance and insurance sectors.

Showing better fortunes were the public sector, accommodation, food services and professional services sectors.

The conference board report provides economic forecasts for seven cities that contributed financially to the research: Lethbridge, Red Deer, Medicine, Brandon, Timmins, Ont., Sault Ste. Marie, Ont., and Rimouski, Que. Historical and employment data is included from 32 other mid-sized cities.

pcowley@bprda.wpengine.com

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Non-profits that are helping people impacted by COVID-19 can apply for relief funding

Red Deer and District FCSS can draw from a provincial pot of $30 million

Bank of Canada cuts key interest rate target while Libs up wage subsidy

OTTAWA — Canada’s central bank made yet another unscheduled rate cut Friday… Continue reading

A message from the Advocate publisher

In good times and bad, The Red Deer Advocate has been here… Continue reading

No Alberta renter will be evicted for non-payment on April 1, promises the premier

No evictions during the entire Alberta public health emergency

WATCH: COVID-19 doesn’t stop Red Deer Public Library from telling stories

Deb Isbister has been reading stories to children for more than 20… Continue reading

Alberta Health Services provides COVID-19 prevention tips

Alberta Health Services has a number of recommendations for people amid the… Continue reading

Alberta government website has latest COVID-19 statistics

Red Deer Advocate readers can stay up to date on the COVID-19… Continue reading

A message from Central Alberta Co-op

The COVID-19 pandemic is a global challenge that’s having a real impact… Continue reading

4 passengers dead aboard cruise ship anchored off Panama

4 passengers dead aboard cruise ship anchored off Panama

Drumheller Institution in Alberta locked down, two inmates tested for COVID-19

Drumheller Institution in Alberta locked down, two inmates tested for COVID-19

Alberta’s premier rejects call to fire health minister over abuse of citizens

Alberta’s premier rejects call to fire health minister over abuse of citizens

Trump boosts virus aid, warns governors to be ‘appreciative’

Trump boosts virus aid, warns governors to be ‘appreciative’

Marc Miller urges First Nations to delay elections during COVID-19 crisis

Marc Miller urges First Nations to delay elections during COVID-19 crisis

Most Read