Alberta’s Small Business Confidence Index, a measurement of small business owner optimism in the province’s economy, has increased once again. This growth follows the overall Alberta Confidence Index which surged sharply in January 2011.
The global economic recovery, particularly in emerging economies, has boosted the demand for natural resources and is causing a corresponding increase in commodity prices. The higher prices make it possible for companies in Alberta to begin or restart many of their energy-related projects.
Investment in energy development is expected to be a major driver of economic growth during the next five years. In 2011 a total of $106 billion in new oil sands projects have been approved or are under construction while only $16 billion remain on hold. Statistics Canada estimates that investment in Canada's unconventional energy sector will increase by 27.8 per cent in the same five-year period and the majority of this development will occur in Alberta.
The Alberta economy is expected to grow by 3.4 per cent in 2011 primarily due to increased business and consumer confidence which is helping to offset a weak natural gas industry. Non-energy investments are also expected to improve gradually as other segments of the economy expand. Lower revenues from natural gNas sales are expected to be offset by royalty revenues from increased bitumen production adding to overall provincial revenue. The development of leading energy technology in Alberta has been coupled with a positive international reputation, allowing local businesses to begin expansion into international markets and increasing growth potential
Job creation is expected to improve and push the unemployment rate below five per cent as employment growth exceeds labour force growth. Labour shortage is expected to become once again a top business challenge, but Alberta should be better suited to attract job-seekers as the unemployment rate differential between Alberta and the rest of Canada widens. Relatively low unemployment rates should place upward pressure on wages. Wage growth should outpace the growth in consumer prices and this is expected to benefit the retail and housing sectors.
Quick facts – Alberta’s growth outlook remains strong
We’ve detailed some key measures from the index, the Alberta Government Finance and Enterprise and the City of Calgary below:
Finally, the election of a Conservative majority government in Ottawa could have long-term benefits for the Albertan economy. The Tories are largely considered to be business- and Alberta-friendly, and with the uncertainty of future elections eliminated, businesses will have a stronger sense of confidence in moving forward with business and strategic plans.