Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud
Today’s release of the GDP for November shows that the economy had some strong momentum during the fall, as economic activity continues to normalize in many sectors. However, the advance estimate for December suggests that growth was flat due to the reintroduction of restrictions to slow the spread of the Omicron variant. Nevertheless, growth in the last quarter of 2021 is likely to be above 6% quarter-on-quarter ar.
Economic activity likely declined in January due to the new restrictions put in place. However, with many of those restrictions gradually lifted, the impact should be temporary and growth should improve in February.
For Alberta, the GDP for November shows that a decline in some key industries, especially the oil and gas sector, likely means that economic activity in November was weaker than in the rest of the country.
The monthly GDP rose by 0.6% month-on-month in November (+3.8% year-on-year), better than the preliminary estimate. With this increase, the level of economic activity is currently above its pre-pandemic level, by 0.2%, for the first time since the start of the pandemic.
The details show that 17 out of 20 industrial sectors posted gains on the month, with hard-to-distance sectors posting some strong gains, as activity continues to normalize in these industries. With the overall level of economic activity being above its pre-COVID level, 10 out of 20 industrial sectors have economic activity above pre-pandemic levels: natural resource extraction, wholesale trade, retail trade, information and culture, finance and insurance, real estate, professional, scientific and technical services, education, health care and public administration.
Statistics Canada’s preliminary estimate for December suggests growth stalled in December. However, advanced information indicates that the impact of new restrictions to slow the spread of the Omicron variant on client-facing industries offset most of the growth in other sectors.
The goods-producing side of the economy increased by 0.5% month-on-month in November. Higher activity in agriculture (+5.5% month-on-month), manufacturing (+1.4% month-on-month) and construction (+0.5% month-on-month) was partly offset by reduced activity in natural resource extraction (-1.8% month-on-month) and utilities (-1.5% month-on-month). Coal mining dropped 17% on the month as a result of the floods in BC.
The services-producing side of the economy rose 0.6% on the month. The increase in activity was broad-based, with robust gains in the client-facing sectors as it continued to recover. As such, activity surged in accommodation and food services (+3.4% month-on-month) and arts, entertainment and recreation (+5.4% month-on-month). There were also some solid gains in wholesale trade (+2.8% month-on-month). The management of companies and support sector was the only service industry to register a monthly decline in activity (-1.9% month-on-month).
For Alberta, there is no specific data in the report. However, we can make an assessment based on activity in some key industries specific to Alberta. The sharp rise in activity in the agricultural sector, driven primarily by the crop production sector (+11.0% month-on-month), suggests the sector supported growth on the month. However, a big decrease in the non-conventional oil sector (-4.3% month-on-month), in support activities for mining oil & gas (-2.0% month-on-month) and pipeline activity (-0.4% month-on-month). Overall, the Alberta economy was weaker than the rest of the country in November.
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Alberta Central member credit unions can download a copy of this report in the Members Area here.