Calgary economy remains a growth leader in Canada

Despite some challenges, Calgary remains an economic growth leader in Canada, according to the Conference Board of Canada.

A recent report by the organization indicated Calgary’s real GDP edged above its pre-pandemic peak (reached in the second quarter of 2018) in the second quarter of 2022. Annual GDP expansion clocked in at a robust 4.3 per cent for 2022, albeit below the 5.6 per cent gain in 2021.

“A slowing national economy will shave Calgary’s GDP growth to 2.4 per cent in 2023, but the city’s increase will exceed Canada’s overall expected economic growth of 0.7 per cent. We forecast Calgary’s GDP will rise 2.8 per cent in 2024 and 3.0 per cent in 2025,” said the report.

The report says Calgary employment has blown past its pre-pandemic annual average peak of 834,275 workers, set in 2019, by rising a record 58,725 jobs (7.2 per cent) in 2022 to hit a total of 873,500 jobs.

The 2022 gain was driven by a roughly 69,375-person (10.9 per cent) increase in services sector employment, which more than outweighed a decline in the goods sector of about 10,650 positions (nearly 6.0 per cent).

“In 2023, we expect Calgary employment to edge up by 1.1 per cent, or 9,400 jobs. The record annual average level of nearly 882,900 positions would be 15.1 per cent higher than 2013 . . . Further 2.2 per cent overall employment growth (roughly 19,700 positions) is our call for 2024, followed by a stronger 2.3 per cent hike (20,765 jobs) in 2025,” says the Conference Board.

“Calgary may be well positioned to attract future workers—valuable in an era of labour shortages. A Calgary Economic Development survey of 1,875 business leaders and workers from Canada, the United States, and England found that 90 per cent of business leaders had a positive impression of Calgary and 74 per cent thought it was becoming a tech and innovation hub. Among surveyed workers, 72 per cent had a positive impression of Calgary, and 58 per cent believed it was a place to build a career.”

Healthy oil prices have also buoyed the overall economy, making Calgary an attractive place to come for many people in other parts of Canada and the world.

The 2.9 per cent increase in Calgary’s population during 2022 was the fastest since the oil-boom years, says the Conference Board.

“The gains resulted from heavy net international and interprovincial in-migration. Ambitious federal immigration targets are benefiting Calgary. We estimate that roughly 27,300 net international newcomers arrived in 2022, twice the 20-year average,” according to the report.

“Net international migration will downshift to a still brisk 22,600 people in 2023 and remain near 21,000 net arrivals in 2024 and 2025. Net interprovincial migration, meanwhile, hit an eight-year high near 10,900 people in 2022. Strong oil prices are always an interprovincial lure, but a diversifying Calgary economy is now attracting disparate newcomers. And the city’s relatively affordable housing is bringing people from the expensive Toronto and Vancouver markets.

“Interprovincial migration will see a small net outflow in 2023, then turn slightly positive during the ensuing few years. In sum, Calgary’s population will rise by a further 2.3 per cent in 2023, then 1.9 per cent in each of 2024 and 2025.”

What does all this mean for the city’s housing market? While employment numbers and population numbers are strong, the housing market continues to face some challenges but remains healthy.

“Calgary’s market for existing homes is finally buckling under the weight of rising interest rates. While the market remains in a balanced position, prices are starting to ease year-over-year. The area’s relatively strong market results from brisk job creation and migratory inflows from provinces like Ontario, where houses are typically pricier,” says the Conference Board.

“The new home market is also faltering. Although the total volume of unsold new units was down from a year earlier for 29 straight months, December and January saw double-digit hikes in inventories of single-detached and semi-detached units. The backlogs come amid a record 17,300 local starts in 2022, up from an already elevated 15,000 units the previous year. Unsurprisingly, the number of units under construction hit an all-time high in January. This pace cannot continue, so we expect a dip in housing starts to 13,100 units in 2023, with both single-detached and multi-family construction falling. Starts will hover near this level in both 2024 and 2025. The mix will shift as multiple starts inch higher and single-detached starts slide.

“Recent strength in residential demand has also permeated the rental market. Data from CMHC’s Rental Market Survey show the vacancy rate among purpose-built rental units fell to 2.7 per cent, the lowest since the oil boom ended in 2014. This lifted average two-bedroom apartment rents by six per cent.”

(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)