After experiencing a modest decline in the first quarter of 2018, employment in Metro Edmonton stabilized and began to expand over the course of the second and third quarter. Real Gross Domestic Product (GDP) growth for 2018 is estimated to be in the range of 2.6% for the city of Edmonton. This will accelerate slightly to 2.7% in 2019.
With a return to employment growth, average weekly wages in 2018 increased as the number of hours worked rose and employment in some high-paying sectors such as the mining, quarrying, and oil and gas extraction sector recovered some of the losses seen in 2016. The increase in average weekly wages was below the rate of inflation, as measured by the consumer price index (CPI), which was above 3% in the third quarter of 2018. Looking ahead, inflation should slow over the balance of the year but will remain above 2%. Lower inflation will help preserve the real value of incomes in Metro Edmonton and support consumer spending.
In 2019, growth will improve marginally as the economies of the province and the city continue to recover; this is assuming West Texas Intermediate (WTI, the North American benchmark oil price) holds within the $US 60 - $US 70 range. Growth rates, however, will be relatively modest when compared to those experienced between 2010 and 2014.
Moderate growth prospects for the global economy and continuing uncertainty as to the expansion of energy export infrastructure will mean that Canadian energy prices are likely to be volatile over the remainder of 2018 and into 2019. While prices improved over the first half of 2018, there is considerable downside risk with respect to energy prices that Alberta firms receive. This could have negative implications on the outlook for Edmonton and Alberta.