Edmonton will finish 2016 with negative growth: chief economist

Edmonton will close 2016 with negative economic growth after its economy "took a hit" in the third quarter, the city's chief economist said Tuesday.

Dramatically lower oil prices have left the city on track for a 0.4-per-cent decline in real gross domestic product for the year, John Rose said in an economic update.

But for the remaining weeks of 2016, the city should see "modest growth" in GDP and employment, he said.

"The construction and manufacturing sectors in the Edmonton area were very weak over the summer," Rose said in a news release.

"September and October indicators show activity in these areas have stabilized and with the rest of the economy continuing to grow at a slow pace, modest improvements will be noticed."

He said he expects the city's unemployment rate, which stood at 7.7 per cent in September, will be in the 7.5 to 8.0 per cent range in coming months. Job losses this year have been "particularly sharp" in construction and manufacturing, he said.

Inflation dips in Edmonton

Inflation in Edmonton dipped in the year's third quarter.Year-over-year, inflation was 0.6 per cent in September as lower energy and shelter costs more than balanced higher prices for food and clothing.

Rose predicts "very modest" inflation for the remaining weeks of 2016, helped by housing and renting costs that are beginning to ease. Higher vacancy rates will help rent prices fall, he said.

Housing starts will remain at relatively low levels for the rest of the year, and won't change much in 2017, Rose said. He noted that the inventory of new and existing single family homes is increasing, causing builders and developers to slow the pace of new house construction.

Looking ahead, Rose said Edmonton's economy will improve "modestly" in 2016. If energy prices improve, the city will see a 1.8-per-cent improvement in overall GDP, but unemployment will remain high, at between 7.0 and 7.5 per cent.

Rose predicts oil prices will recover in 2017 to $50-$55 US per barrel. Rebuilding in Fort McMurray will also help Alberta's GDP next year, he said.

• In December 2015, Rose saw Edmonton's economy as 'an island in the storm'