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Varcoe: New year will ring in renewed optimism for Alberta economy – Calgary Herald

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Sunrise lights up the towers of the downtown Calgary skyline on Monday, December 16, 2019. Gavin Young/Postmedia


Here’s a small pick-me-up heading into a new year — two banks are projecting modest economic growth returning to Alberta in 2020 after a lethargic performance this year.

The improved outlook comes as oil prices have broken through US$60 a barrel in recent days, their highest point in three months.

TD Economics released a report this week forecasting Alberta’s gross domestic product will expand by 1.8 per cent next year, more than double the tepid rate over the past 12 months.

Similarly, a new RBC outlook projects the provincial economy will increase by 1.7 per cent in 2020 after “puny” growth this year.

“A good part of it is the fact 2019 was so sluggish. It’s a little bit of a comeback story,” RBC senior economist Robert Hogue said in an interview.

“By no means are we saying Alberta is out of the woods, but I think (there) will be more incremental improvements.”

There are still plenty of reasons to be cautious, however. The latest employment report saw 18,200 fewer jobs in November and the unemployment rate jumped up to 7.2 per cent.

Investment levels remain low, retail spending is down from a year earlier and drilling activity is off from 2018 levels.

But there have been recent improvements in areas such as energy prices and the outlook for global trade in 2020. While some local businesses have been cutting staff, other firms — such as in the technology area — are thriving and hiring.

Benevity, a Calgary-based firm that provides clients around the world with employee engagement software that facilitates giving and volunteering, is expanding quickly and will exit the year with about 650 employees.

“We continue to be quite bullish on our prospects,” CEO Bryan de Lottinville said Thursday.

“For us, a lot of the challenge is hiring people. I think we hired 240 people this year and are looking for probably another 175 or so next year.”


Bryan de Lottinville, president and CEO of Benevity, in the firm’s Calgary office.

Ted Rhodes /

Calgary Herald

In its economic outlook, TD said the province’s steps to ease government-mandated oil production quotas, “alongside a modest rebound in investment, are expected to underpin growth” next year.

As well, oil prices are headed in the right direction for the province.

Since OPEC and its partners decided earlier this month to deepen production cuts, crude prices have increased, with West Texas Intermediate crude for January delivery closing Thursday above US$61 a barrel on the New York Mercantile Exchange.

TD expects benchmark U.S. oil prices will keep trading in the range of $55 to $60 a barrel next year.

While the jobless rate remains high and employment gains will be modest in Alberta — at just 0.7 per cent next year, according to TD — some bright spots exist.

The construction of two massive petrochemical complexes in Alberta’s Industrial Heartland area is continuing. Housing starts are “gradually turning the corner, with modest gains in sales and prices anticipated” over the next few years, the report states.

“2019 was pretty lacklustre and we’ve seen that in a lot of indicators. Our 2020 forecast calls for a modest rebound,” TD economist Omar Abdelrahman said in an interview Thursday.

For its part, RBC predicts energy, manufacturing and construction, as well as the labour market, will improve in 2020.

Incremental gains in pipeline take-away capacity should help ease the transportation bottlenecks and see capital investment begin to pick up.

“Alberta’s recovery has been frustratingly slow, but 2020 promises to kick things into a higher gear,” the RBC forecast states.

The key test for Alberta in the coming year will be on the investment and jobs fronts.

ATB Financial is forecasting only 0.9 per cent economic growth for next year. It assumes worries about when additional pipeline capacity is built will act as a constraint, keeping investment levels soft.

Yet, as ATB economists pointed out Thursday in a blog, there are some signs headway is being made in the economy.

Progress continues on the Line 3 replacement project in the U.S. and the Trans Mountain pipeline expansion, OPEC cuts mean “the threat of another global oil glut is being held in check, at least for now,” while fears of a global recession and trade war are diminishing.

“There are some positive stories out there,” Ken Kobly of the Alberta Chambers of Commerce said last week.

“We are so used to hearing about all of the big things that are not doing well or not happening, and that sort of drowns out some of the small gains that we are making.”


An aerial view of construction progress on the terminal and tank farm on Burnaby Mountain for Trans Mountain’s pipeline expansion as of November, 2019. Handout courtesy of Trans Mountain.

PNG

Newcomers continue to move into the city and the total number of people employed in Calgary sat at 877,000 last month, up almost 34,000 from a year ago.

Some companies are succeeding in this tough environment. For example, payments technology firm Helcim expects to add about 25 people next year and is moving into a new downtown office.

“We are excited about our outlook,” said Helcim CEO Nicolas Beique.

“Next year is when some big changes are coming to our organization that we think will fuel a lot more growth.”

At Benevity, much of its work is for international clients, but de Lottinville also feels a little more optimistic than last year about the prospects for the provincial economy.

“We have to create more narrative around the successful companies that are scaling (up) in a diversified context, whether those are in the energy sector or elsewhere. If all you hear is doom and gloom, you will be communicating that,” he said.

“Our clients, some of the local ones, are optimistic that most of the real challenges are behind us and they’re trying not to look backward, but look forward.”

A new year is coming soon. Hopefully, so is a new direction for the Alberta economy.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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Economy

U.S. September job report is going to show economy entering a weaker phase – MarketWatch

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American households are used to television dramas where difficult problems are resolved in one hour, or perhaps eight one-hour episodes on Netflix.

So it is with the economy, and there is a growing perception the U.S. economy has been suffering for long enough that the worst must be behind us.

Gregory Daco, chief U.S. economist at Oxford Economics, said he routinely comes across people now who think the economy is out of the woods, given that the unemployment rate has dropped to 8.4% a peak of 15%.

They don’t seem to realize that the unemployment rate is still higher than the peak unemployment rate of prior recessions, Daco said, in an interview.

The fact is that even after what has been a fairly strong first phase of recovery, the economy has only recovered to reach levels close to the worst part of the 2008-2009 financial crisis, he added.

The economy now is closer to the gnarly 2009 period than the slow but steady recovery of 2014-2016.

“I think that is often times an eye opener for clients,” he said.

Daco said the September jobs report from the U.S. Labor Department due this coming Friday will signal the economy is entering a critical phase, with less assistance from government and a number of uncertainties from the November elections, the coronavirus pandemic, and uncertain financial markets.

“There are a number of risks and we are going into the fall without much insulation,” he said.

The rough consensus among economists is for September nonfarm payroll gains to moderate to slightly under one million in September from 1.37 million gains in the prior month.

Daco is forecasting a sharper slowdown to a gain of 600,000 jobs. He sees the unemployment rate dipping to 8%, but due in part to workers giving up looking for work and dropping out of the labor force.

While 600,000 jobs would be considered strong in an ordinary environment, it is not strong enough to put a dent in the 11 million Americans who have lost jobs during the pandemic and millions more who are underemployed, he said.

“I continue to view the glass as half-empty. We’re still a long ways from where we were pre-Covid,” Daco said.

Richard Moody, chief economist at Regions Financial Corp., thinks it may be hard to gauge the strength of the September report given the technical cross-currents in the data.

September is usually the month that summer vacation resort employment declines as the season ends, and without those job losses this year, the reported gain might look stronger. In addition, there was also a decline in temporary census workers in the month that may skew the data to the downside.

The job report will be released Friday at 8:30 a.m. Eastern on October 2. There will also be critical data during the week on the manufacturing sector for September from IHS Markit and ISM on Thursday, and on consumer spending and inflation for August.

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Alberta cities warned 'fiscal reckoning' is ahead as COVID-19 shakes economy – Calgary Herald

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Article content continued

In the UCP government’s fall budget that year, cities saw their capital transfers and grants slashed, with Edmonton and Calgary taking the largest reductions.

AUMA president Barry Morishita said Thursday that the organization is looking forward to “resetting” the relationship between the advocacy group and the minister. AUMA declared its relationship with Madu “broken” over the summer after he didn’t respond to concerns on changes to local election rules and passed amendments into law over its objections.

In prerecorded remarks, Premier Jason Kenney touted the province’s infrastructure stimulus plan — $500 million that will be doled out to cities for projects that will spur job creation. Calgary is submitting a list of projects for a total of $152.8 million in funding.

But the premier also scolded local governments that have not embraced pro-growth policies. He said he wouldn’t “name names” but revealed a manufacturer complained that a municipal noise bylaw is preventing it from setting up shop.

“In the depth of a crisis like this, those 400 jobs matter a lot more than a few noise complaints from local residents,” he said.

He added cities should focus on getting rid of “unnecessary rules, red tape and costs” that might stand in the way of job creation.

“When I speak to major business leaders about prospective investment in Alberta, very often a message that I hear back is the greatest impediments they’ve experienced are at the local level, at the municipal level,” he said.

masmith@postmedia.com

Twitter: @meksmith

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Climate activists demanding quick transition to a green economy in Quebec – Global News

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Two Okanagan families are in a financial and literal hole after a pool contractor allegedly took their money and skipped town.

“We hired a contractor back in late May, he came in and did all the excavation work,” said Steve Croxford, a Kelowna resident.

“He told us he had all the permits in place to get going.”

However, the contractor had no permits, according to the city.

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It’s a case of buyer beware after Stephana Johnson and her neighbour Steve Croxford found what they thought was ‘a great deal’ after finding a pool contractor on Facebook.

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They decided to hire the same contractor to build both of their pools in neighbouring yards.

What happened soon after construction began was a shock.

“That’s where he’s abandoned it basically, we paid him approximately half of the money for the pool,” said Croxford.

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The two families said they hired a man who calls himself Jared or J-Hay and his company Pyramid Pools.

The pool contractor promised them two finished underground pools within four weeks — it’s now been almost four months.

Global News talked to multiple pool companies in Kelowna who say they’ve heard of this fly-by-night pool contractor who’s left multiple people high and dry.

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Long-vacant McDonald’s restaurant in Kelowna to be levelled this fall, city says

Shortly after the alleged fraudster skipped out on the job, the city sent an inspector to their properties.

They issued a cease work order on Aug. 1st and the property owners say the city demanded a 71,000 dollar bond and ordered them to remove the massive dirt pile that was left on city property.

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“We’re really hoping the city helps us as much as they can,” said Stephana Johnson, a Kelowna resident.

“As law-abiding citizens that we are, we want to do nothing but clean it up.” 

RCMP had no comment about the possible fraud that has been reported to them and the city says it’s working to resolve the issue.






2:16
Power has now been restored to 3,900 customers in the Kelowna area following a powerful wind storm Wednesday night


Power has now been restored to 3,900 customers in the Kelowna area following a powerful wind storm Wednesday night

© 2020 Global News, a division of Corus Entertainment Inc.

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