2016 was not the best year for a lot of the men and women in Alberta. That being said, the final quarter of the year brought with it a note of optimism, namely that the worst was truly behind us. The unemployment rate, the highest it had been in decades, had hopefully topped out. The plummeting price of oil had found a bottom. According to a variety of sources, the recovery was starting to begin.
A month into 2017, a fresh year and what do we know now? That promised rebound is certainly happening. Late last year, we briefly touched on how ATB had predicted a modest 2.1% expansion for the province's economy. Since then, the price of oil has risen to US $54 a barrel as a deal to reduce output between nations involved in the Organization of Petroleum Exporting Countries took effect. It’s expected the price will likely hover between $52 and $55 for the rest of the year, signifying stability.
In Western Canada, there’s scores of industrial projects underway expected to help stimulate the recovery process (we’ve written about these projects here and here). Vehicle sales are making an improvement. It’s expected the rebuild of Fort McMurray will help make up for lost ground. There's a larger number of active rigs working in Western Canada than this time a year ago and the province's oil production increased by nine percent in November with 3.3 million barrels per day.
A study conducted by the Business Development Bank of Canada forecasted a return of confidence in the market. This study found smaller Alberta businesses are expected to increase spending this year by a record 17.1 percent. One thing that could certainly provide a boost would be the impact of the Keystone XL pipeline; already one small Alberta town is noting an increase in business interest days after the pipeline talks were revived.
So in short, things are starting to look up. But there's still a ways to go. It’ll be quite some time before businesses are ready to hire back employees laid off. ATB Chief Economist Todd Hirsch, a major cause for much of the cautious optimism surrounding the economy, claims the real sign will be when consumers begin buying houses and cars, displaying confidence in the market again. “We are expecting the recession will end in 2017.” Hirsch recently told Global News. Let’s hope he’s right.