Business confidence amongst Alberta’s small and medium-sized businesses took a slide last quarter, according to ATB Financial’s most recent Business Beat Survey.
Optimism in energy and construction dropped considerably, but the retail sector posted the biggest fall. Business confidence in retail slid by nearly 15 points to 64.4. Access to labour and changes to the Temporary Foreign Worker Program (TFWP) imposed in June are likely to blame.
The TFWP was initially set up to help satisfy short term labour needs. This summer’s amendments have made it trickier and more costly for businesses to access temporary labour. Interestingly, 72 per cent of the respondents to ATB’s Business Beat Survey noted that the TFWP is necessary to combat the labour shortage here in Alberta.
Plenty of public discourse has surfaced recently around the idea of such a shortage. Many economic indicators reveal that it may not exist in Alberta. However, ATB’s survey suggests Alberta’s businesses are in need of all labour types. Respondents agreed by 64 per cent that it is difficult to find Albertans to hire into unskilled positions, while 58 per cent agreed it is difficult to hire Albertans into skilled roles.
**Article courtesy of Todd Hirsch of ATB Financial. Thanks Todd!!
This year’s stabilization of lofty North American lumber prices is putting smiles on the faces of mill owners around Alberta.
Lumber prices have been seeing better levels over the last few years due almost entirely to the revived housing market in the United States. After several years of struggling in the post-recession period, U.S. consumers are feeling more confident about their economy and job prospects. As a result, home builders south of the border are seeing some pent-up demand for new houses.
A lot of framing lumber goes into those structures. Last month, the benchmark price for framing lumber was $401 (U.S.) per thousand board feet. That’s the highest it’s been in over a year and well above the 10-year average of $311 (U.S.). The benchmark price is calculated by Random Lengths, a U.S.-based forestry sector organization that tracks prices and industry issues. The composite price is a weighted average of 15 key framing lumber prices.
The news is even better because of the soft Canadian dollar. The loonie was over parity with the U.S. greenback in 2013. Now, it sits around $0.91 (U.S). Lumber is priced in U.S. dollars but producers have to pay their operating costs in Canadian dollars, so the loonie’s relative weakness is boosting profits.
**Article courtesy of Todd Hirsch of ATB Financial. Thanks Todd!!
After a shaky start to the year, the Canadian economy roared to life in the second quarter of 2014. The latest figures of total economic output from Statistics Canada showed that the economy grew by 3.1 per cent during the months of April, May and June.
The percentage growth measures the real gross domestic product (that is, the value of total output of good and services, removing the effects of inflation). It is also the quarterly change at annualized rates—meaning the percentage change that would be experienced in a complete year if the quarterly change was to be maintained for four quarters.
The second quarter expansion is the strongest rate of growth the economy has seen since 2011. “The quarterly growth was a result of increased economic activity in all sectors of the economy except non-profit institutions serving households,” says Statistics Canada in its press release.
Today’s report should cheer markets and policy makers, many of whom have become concerned about the Canadian economy stalling out in 2014. Two areas of greatest concern were exports and the slow growth in business investment (i.e., companies spending money on new plants, equipment and buildings).
Fortunately, total business investment expanded smartly in the second quarter following two quarters of contraction. Exports also did well. Exports of goods and services increased 4.2 per cent (quarter-over-quarter) following a 0.2 per cent decline during the first quarter of the year.
**Information provided by Todd Hirsch, Chief Economist with ATB Financial. Thanks Todd!!
Well, it's really not a huge surprise for anyone who has been paying attention to the Calgary real estate market, that we are up up up across the board. In some areas, we are even outpacing the long-term ten year average. At the head of the surge are the condos pushing double digit increases in sales, pricing and inventory. Who knew? Well, we did.
May saw more than a thirty percent increase in the number of condos sold this year compared to last, and the average price has also increased anywhere from 3% to 16% where the apartment style condos are on the upper end of that range. Compared to last couple of months, the monthly additional inventory of condos (new listings) has increased steadily. For the month of March there were 1119 condos newly listed (combined townhomes and apartment style). April saw 1170, not much of an increase. In May however we're looking at an increase to 1390 units newly listed. Strangely in June, the number defied us and lowered to 1217 units introduced. Although there seems to be a stammering, keep in mind that there are as of right now there are 1629 units for sale in Calgary. So far this month, the number of new listings introduced total just 35.
With respect to the condo market, a lot of talk has been centred around the higher price and the inventory numbers. If supply and demand become closer in volumes, we will approach a balanced market, where the seller and the buyer will have equal footing. This situation will also help to ease the price increases over the next while. However, if the inventory begins to run low and the influx is slow, we could see the prices climb even higher than they are now at current record highs. With these latest numbers, will it balance, or will it tip? We shall see.
Alberta’s housing market is a tale of two cities. Since March of 2009, Calgary’s new house and land prices have increased 19.7 and 30.7 per cent, respectively. The story is a bit different in Alberta’s capital.
The New Housing Price Index (NHPI) is calculated by using both contractors’ selling prices of new residential housing and their estimates of the current market price of the land. The NHPI is usually presented as one figure, but when we split Alberta’s to examine housing and land prices individually, we get a better look at the province's market.
Developers and contractors continue to seek out viable land in Calgary, a demand that has been keeping prices up since 2009. Calgary’s prices for new homes are rising more sharply than contractors’ land price estimates. As the city's overall economy strengthens, demand for housing and usable land will rise.
Edmonton is a different story. Since March 2009, the price of a new home has gone up 2.6 per cent. Contractors’ land price estimates have fallen 5.7 per cent. Both fell sharply in 2008 and haven’t seen any significant growth since the decline.
It’s a mystery why Edmonton’s new housing prices and land estimates are still below 2007 levels. However, Edmonton’s healthy economy might help the numbers start to rebound.
**Information provided by Todd Hirsch of ATB Financial. Thanks Todd!!
Prices of new homes in Calgary have posted the largest year-over-year increase among any city in Canada, according to new numbers from Statistics Canada. At the same time, prices in Edmonton have fallen flat.
The latest information, released this morning, suggests the index of new homes in Calgary reached 107.8 (with the index of prices in 2007 set equal to 100). That’s 7.5 per cent higher than March of 2013.
At the same time, Alberta’s capital city reported a small decrease. Edmonton's index in March stood at 90.9—about 0.1 per cent lower than a year ago. Over the last four years, new home prices have been essentially unchanged at close to an index of 90 (see chart). That means prices are nearly 10 per cent lower than they were in 2007.
The contrast between prices in the major cities is puzzling. Both cities continue to fare well economically. Edmonton actually holds a slight advantage in the labour market: its unemployment rate in March was 4.8 per cent, slightly lower than Calgary’s 5.0 per cent rate (three-month moving averages).
Some of the difference could be explained by the ongoing recovery from last year’s floods, which is still having an impact on material prices and building costs. With respect to Calgary’s hot market, Statistics Canada says: “Builders reported that higher material and labour costs, market conditions and the cost of developed land were the primary reasons for the increase.”
**Information courtesy of Todd Hirsch of ATB Financial. Thanks Todd!!