With the arrival of 2017, we have more question marks and uncertainty than ever before. I am getting bombarded with questions about how the market will perform in 2017 in comparison to the previous year; when we will finally see the bottom; and how the revitalization of the oil industry will affect the Calgary real estate market. Here is a detailed analysis of the market influencers for the Calgary real estate market and their outlook for 2017.
Today, we will be talking about the Labour Market:
The Calgary employment levels have been declining throughout 2016 as a result of the weak oil price. Most of the initial job losses occurred in industries directly related to the energy sector, however as time went on, the impact spread to other sectors of the economy as well.
Since the crash of oil in Q3 of 2014, more than 40,000 full-time positions have been lost in Calgary, as employers look to cut costs and reduce their workforce due to slower economic activity. The overall unemployment rate for Calgary reached 10% in the last quarter of 2016, far surpassing the historical norms as well as the national average (6.8%).
This number is looking to decrease in 2017, which job growth anticipated to move back into positive territory due to higher oil prices and increased spending by major corporations. The Conference Board of Canada has forecasted employment growth to improve by a modest 0.96% in 2017. While this will not compensate for all the losses in the past year, it should contribute to softer unemployment rates, which are forecasted to average 7.8% in 2017. This improvement in unemployment rate should help prevent any further contractions in housing demand.
- Calgary's unemployment rate rose to 10.3% by November 2016, far higher than the provincial average of 9% and the 6.8% recorded in Edmonton.
- An unusually high unemployment rate is expected to continue to impact wage rates, consumer spending and overall economic activity.
- Provincial average weekly earnings include overtime trended down throughout most of 2015 and 2016. The declines have averaged nearly 3% in 2016. While wage growth levels eased during the last recession, it was the first time there was a consistent year-over-year decline in this decade.
- Employment declines in 2016 were all full-time job losses; the number of part-time positions actually increased. The improvement in part-time positions reflects cost cutting measures that took place over the past two years, causing employers to shift some of the full-time positions toward part-time.
- In the first part of the economic downturn, employment activity was hit hardest in sectors such as manufacturing, construction, primary and utilities and business services. As weak conditions persisted, Calgary started to see the impact spread into other service sectors and industries, including transportation and warehousing, personal and commercial services and public administration.
- The only sectors that have recorded employment levels higher than 2014 are non-commercial services such as education and medical, personal services and wholesale and retail trade.
If you aren't happy, then neither am I. It's that simple.