In this week’s ATB Economics Weekly Wrap…

• Taking flight - Momentum continues in Alberta’s labour market
• Where are the new jobs?
• Bank of Canada: Still haven’t found what they’re looking for
• Intending to build - residential permits on the rise
• Under pressure - Insolvencies trending higher
• Interesting Fact: International Women’s Day - Female participation rates
• Chart of the Week: Alberta’s young demographics in a Canada-US context

Alberta leads provinces in February job growth

Canadian employment exceeded expectations in February, posting a 40,700 increase—nearly doubling consensus forecasts.

This was a services-led increase, with accommodation and food services and professional, scientific and technical services leading industries and offsetting declines in manufacturing.

But the unemployment rate rose 0.1 points to 5.8% as even more people entered the labour force. The employment rate—those employed as a share of the population aged 15 and over—fell for the fifth straight month.

With last month’s gain, Alberta employment is up 4.1% year-over-year, or 99,800, compared to 1.8% nationally.

February’s employment jump was enough to prevent the unemployment rate from rising amid strong labour force trends. The jobless rate held steady at 6.2% despite another sizable uptick in the 15+ population and an increase in the labour force participation rate.

Where are the new jobs?

The Business Council of Alberta prepared an insightful report that leverages big data on job vacancies. It helps us get a better read on where labour demand is growing in Alberta. Highlights include:

• Trades and health care - Job postings in these categories have surged since 2018 as have postings for education-related jobs.
• “Middle” skills - A large increase in postings for middle skills such as a college diploma and apprenticeship training.
• Tech skills - Increased demand for tech skills in business intelligence and data analytics.
• Decoupling - Alberta’s labour market moves less with oil and gas than it used to.

Bank of Canada holds, looking for more

“But I still haven't found what I’m looking for”  –U2

The Bank of Canada said ‘not yet’ on Wednesday. Interest rates will stay put for now, with an April cut highly unlikely based on market expectations and press comments by Governor Tiff Macklem.

The Bank seems content to wait for…more data! We like data too, but the question is, does the Bank not already have enough to go off? The Canadian economy has slowed (continuing to decline per capita), and outside shelter costs (a big one), inflation is moving in the right direction.

So what is the Bank looking for? That the softer January CPI reading is not just a blip, and the downward trend holds.

For the inflation doves out there, Wednesday’s statement wasn’t much to get excited about. The forward looking statement was a carbon copy of January’s. The most noteworthy change was a reference to wages, and even that was pretty mild: “there are some signs that wage pressures may be easing.”  Not much to write home about, and today’s labour force data shows wage growth still running pretty hot at 5% y/y in February. They also said the economy is in “modest excess supply,” but they’ve been alluding to that for some time.

So what has changed? Not much really. We still view June as the most probable date for a cut, with July a close second choice. A very friendly core inflation reading in February could push that into April, but we wouldn’t count on it.

For more analysis from ATB Capital Market’s rate desk, check out this quick take.

Gaining altitude - home construction on the rise

One of the Alberta storylines of 2023 was the dramatic turnaround in home construction in the second half of the year. That momentum has continued with January starts holding north of 40,000 annualized for the sixth straight month.

But construction is running behind the population, and many homes will need to be built to accommodate the influx of migrants. To their credit, homebuilders have stepped up to the plate amid challenging circumstances including labour shortages, rising input costs, and higher interest rates.

In January, Alberta residential building permits surpassed $1 billion for the third month in a row. The gain came from multiple dwelling units with single units pulling back. On the non-residential side, permits totaled $461 million, up from December, but still off mid-2023 peaks.

Insolvencies trending higher

More Canadians are feeling the pinch from higher interest rates. The number of insolvencies filed by businesses and consumers across Canada hit the highest level since prior to the pandemic in January, with a particularly large jump among businesses. Business bankruptcies spiked in January in Canada, particularly in Ontario and Quebec, but stayed relatively low in Alberta.

Alberta insolvencies have moved lower in December and January, but sit above pre-pandemic levels. The upward trend (based on a 12-month moving average) in insolvencies is entirely due to proposals, while bankruptcies remain low (see chart).

Interesting Fact: Female participation in the labour market

Today is International Women’s Day! To celebrate the event, we invited a guest author, ATB’s Miranda Mantey, to write Thursday’s Owl. Check it out. You can also check out our three-part series for Women’s Entrepreneurship Day, which talks about trends in employment, business ownership, and labour force participation.

In 1976, males in Alberta had a labour force participation rate* that was 31 percentage points higher than females. In 2023, the gap was 9 percentage points. The female labour force participation rate was 65.0% in Alberta last year, higher than any other province and compared to 61.6% nationally.

*The labour force participation rate measures the percentage of the population aged 15+ working or looking for work.

Chart of the Week: Alberta among the youngest in Canada and the US

Alberta is sometimes compared to Texas. Here are a few reasons why.

Both are major energy producers. In 2022 (latest year available), oil and gas extraction and mining directly contributed $US 205 billion to the Texas economy, or 8.5% of state GDP.

Trade linkages run deep. As we discussed in the February 16 Wrap, the Lone Star State is Alberta’s second largest export market after Illinois. Excluding oil and gas, it is Alberta’s largest market. In addition to oil, major exports include meat, chemicals, plastics and machinery. In fact, nearly a quarter of Alberta’s $3.8 billion worth of machinery industry exports went to Texas last year.

Perhaps less known are demographic similarities.

Last year, Texas had the largest increase in total population in the US (+473,000), though Florida (1.64%) and South Carolina (1.71%) edged out Texas (1.58%) in percentage growth. As in Alberta, the differentiator for Texas was in-country migration—Texas attracted nearly 187,000 people (net) from the rest of the US, second only to Florida. Interstate migration represented 39% of the state’s population growth last year.

Alberta led all provinces in percentage population growth in 2023 due to interprovincial migration (accounting for 31% of population growth). The percentage growth in Alberta, however, was much higher than in Texas at 4.1% due to record international migration in Canada.

Relative affordability seems to be playing a role in both jurisdictions. For example, the latest data from 2022 show Texas gained 60,200 more people than it lost to California, where housing is more expensive on average. Likewise, Alberta has seen a wave of migration from BC and Ontario, where housing is more expensive.

Both jurisdictions are relatively young. The Chart of the Week shows the percentage of the population 65+ by province and state. By this measure, Texas and Alberta are among the youngest, with Utah having the lowest share of 65+.*

*We use 2022 stats, the latest comparable year for both the US and Canada.

Answer to the previous trivia question: As of the first quarter of 2024, there were 18,964 private sector businesses in Alberta owned on a majority basis by women. This works out to 14.5% of all private sector businesses in Alberta.

Today’s trivia question: Texas has two official state peppers: The “native” state pepper is the very hot chiltepín. What is the other state pepper of Texas?