Economic growth in Red Deer will moderate this year and next, but still compare favourably with the performance of the country’s fastest-growing economies, says a Conference Board of Canada report.
In its Mid-Sized Cities Outlook, released on Friday, the not-for-profit research organization predicted that Red Deer’s real GDP will increase by 3.5 per cent this year and 2.5 per cent in 2015. That compares with 4.5 per cent last year and 4.4 per cent in 2012.
In May, the Conference Board forecast that Calgary would have the fastest growth among Canada’s largest cities this year, with its GDP 3.4 per cent higher than in 2013. Regina was projected to experience a 3.3 per cent increase and Edmonton a 3.1 per cent rise.
“Alberta’s mid-sized cities are benefiting from strong provincial energy sector activity,” said Alan Arcand, associate director with the Conference Board’s Centre for Municipal Studies. “Their pace of growth is similar to and in some cases above that of the larger centres in the province.”
Red Deer’s primary and utilities sector — which includes the oil and gas industry — has been particularly strong, said the Mid-Sized Cities Outlook report. Construction activity in the city has also been brisk, with the related services sector also performing well.
And renewed consumer spending has boosted the retail and wholesale markets.
However, growth in manufacturing output has been “sluggish” the last two years, said the report.
“Goods-producing industries will be mainly responsible for this year’s slower economic momentum, although services sector activity is also projected to slow,” said the report.
“Even though the primary and utilities sector will continue to benefit from strong provincial energy sector activity, output growth in the local sector is expected to be cut in half this year.
“Fortunately, manufacturing output growth is expected to improve this year, as the sector should benefit from a slightly weaker Canadian dollar.”
Growth in the construction sector should also remain stable, said the report, despite the fact that housing starts are expected to decline slightly from 2013 levels.
The Conference Board report also anticipates a slowdown in local job creation this year and next.
After a 5.5 per cent jump in employment opportunities in Red Deer in 2013, the increase in jobs this year is pegged at 1.2 per cent, followed by a 1.0 per cent rise in 2015.
“Sizable gains are expected in the primary and utilities sector and the construction sector but losses are in store for manufacturing,” said the report of Red Deer’s employment opportunties.
“On top of that, only mild job growth is projected in the services sector.”
The Mid-Sized Cities Outlook focused on eight Canadian cities: Red Deer, Lethbridge and Medicine Hat; as well as Saint-Jean-sur-Richelieu, Que.; Timmins and Sault Ste. Marie, Ont.; Brandon, Man.; and Nanaimo, B.C. Of these urban centres, Red Deer had the highest GDP growth in 2013, and is forecast to lead the others this year as well. In 2015, it is projected to tie with Nanaimo for top spot.
For Alberta as a whole, the Conference Board is projecting GDP growth of 3.2 per cent this year and 2.6 per cent in 2014. The 2013 figure was 3.6 per cent.
“Economic growth in Alberta will be tops in the country in 2014, as the energy sector continues to spread its benefits throughout the entire economy,” said the report. “The abundance of job opportunities, combined with high wages, continues to keep in-migration elevated. Consumer spending and housing will benefit as a result, enabling real gross domestic product growth to reach 3.2 per cent this year.”
Nationally, real GDP growth is forecast to hit 2.3 per cent this year and 2.4 per cent in 2015. Last year it was 1.7 per cent.
The Conference Board report also looked at the historical economic performance of 46 mid-sized cities.
In the decade leading up to the 2008-09 recession, Red Deer had the third highest average annual growth of those cities, at 5.4 per cent. The Regional Municipality of Wood Buffalo led the way at 7.6 per cent, followed by Sept. Îles, Que. at 5.8 per cent. Canada’s average GDP growth during this period was 3.2 per cent.
Wood Buffalo, Sept. Îles and Red Deer also topped the 48 cities when it came to job growth between 1998 and 2007, with Red Deer averaging a 4.6 per cent annual increase in employment opportunities during this period.
hrichards@www.reddeeradvocate.com