Calgary and Area Labour Market 2015 - Quarterly …...2015>Q4 This Calgary and Area Labour Market Report provides labour market and economic information for the Calgary Region, Alberta

2015>Q4

This Calgary and Area Labour Market Report provides labour market and economic information for the Calgary Region, Alberta and Canada for the fourth quarter of 2015.

Applications Management Consulting Ltd.

Calgary and Area Labour Market - 2015

Q4 REPORT

Table of Contents.................................................................................................Summary 1

..............................................................................................Calgary Economy 1

...............................................................................................Alberta Economy 3

...........................................................................................Canadian Economy 5

.........................................................................................Global/U.S.Economy 6

......................................................................................Labour Force Statistics 7

.........................................................................................Industry Employment 9

.............................................................................................Employer Survey 10

........................................................................................The Economy 14................................................................................Calgary Region Economy 14

...........................................................................................................Economic Growth 14

...........................................................................................................................Inflation 15

...........................................................................................................................Housing 16

..................................................................................................................Rental Market 19

...........................................................................Non-Residential Building Construction 20

..............................................................................................Average Weekly Earnings 20

...................................................................................................Employment Insurance 22

..................................................................................................................Office Market 23

.............................................................................................Alberta Economy 24...........................................................................................................Economic Growth 24

........................................................................................................................Oil Prices 26

......................................................................................................Crude Oil Production 27

..........................................................................................................Active Drilling Rigs 28

..................................................................................................................Rental Market 28

..............................................................................................................Building Permits 29

.....................................................................................................................Retail Sales 30

...................................................................................................................Bankruptcies 32

Calgary and Area Labour Market - 2015 Q4 Report

.......................................................................................................................Population 32

.........................................................................................Canadian Economy 34...........................................................................................................Economic Growth 34

......................................................................................................................Investment 35

.......................................................................................................Consumer Spending 36

...........................................................................................................................Housing 37

..............................................................................................................................Trade 39

....................................................................................................................Fiscal Policy 40

......................................................................................Global/U.S. Economy 41................................................................................................Global Economic Growth 41

.....................................................................................................Advanced Economies 43

.....................................................................................................Emerging Economies 45

....................................................................................................U.S. Economic Growth 46

.......................................................................................................Consumer Spending 47

......................................................................................................................Investment 48

..............................................................................................................................Trade 49

................................................................................................................Labour Market 49

..........................................................................Labour Market Review 51......................................................Calgary Census Metropolitan Area (CMA) 51

....................................................................................................................Employment 51

...............................................................................................................Unemployment 52

.............................................................................................................Alberta 54....................................................................................................................Employment 54

...............................................................................................................Unemployment 58

............................................................................................................Canada 59....................................................................................................................Employment 59

...............................................................................................................Unemployment 62

................................................................................................................Job Vacancies 63

...................................................................................Employer Survey 65..................................................................................................................Survey Profile 65

............................................................................................................Business Activity 66


..........................Employment: Past Layoffs, Vacant Positions and Future Employment 68

..................................................................................................Recruitment Resources 72

......................................................................................................Recruiting Difficulties 74

.........................................................................................................Employee Turnover 78

........................................................................................................................Retention 81

..................Supplemental Questions - Focus on Employee Training and Development 84

.................................................................................Job Bank Analysis 92.................................................................................................City of Calgary 92

.................................................................Communities Surrounding Calgary 93

........................................................................................Banff/Canmore Area 93

.......................................................Appendix A: Survey Methodology 97..............................Appendix B: Employer Survey Occupation Results 98


CALGARY ECONOMYSUMMARYQ4-2015

1

Summary

Calgary’s economy continued to weaken in the final quarter of 2015. Real Gross Domestic Product (GDP) is forecast to contract by 0.5 per cent in 2015, following robust growth of 5.1 per cent in 2014.Calgary Economy

ECONOMIC GROWTH

Calgary’s economy is forecast to contract by 0.5 per cent in 2015. The goods-producing sector is projected to contract by 2.6 per cent, while services sector output growth is projected to be modest at 1.3 per cent. Looking ahead, improved performance in Calgary’s primary and utilities and manufacturing industries, along with growth in the services sector, is expected to drive a real GDP growth rate of 1.8 per cent in 2016. Unfortunately, the construction industry is not expected to recover in 2016, with construction output forecast to contract 5.0 per cent.

2014

2015F

2016F

-2% 0% 2% 4% 6%

1.8%

-0.5%

5.1%

Calgary GDP Growth

INFLATION

Consumer prices in Calgary rose 1.5 per cent in the twelve months to December 2015, following a 2.0 per cent increase in November 2015. Alberta’s inflation rate was also 1.5 per cent in December, down from 2.0 per cent the previous month. At the national level, the annual increase in the Consumer Price Index (CPI) was 1.6 per cent December, up from 1.4 per cent in November. Inflation in Calgary is projected to average 1.5 per cent in 2016.

2014

2015F

2016F

0% 1% 2% 3%

1.5%

1.3%

2.9%

Calgary CMA Annual Inflation Rates

RENTAL MARKET

Calgary’s apartment vacancy rate jumped to 5.3 per cent in October 2015, from 1.4 per cent the previous year, and tied for the highest vacancy rate since 1993. Among Alberta’s largest urban centres, Edmonton (4.2 per cent) and Medicine Hat (4.6 per cent) had the lowest vacancy rates in October 2015. Wood Buffalo posted the highest vacancy rate at almost 30 per cent, up significantly from 11.8 per cent in October 2014.

ABWood BuffaloGrande Prairie

LethbridgeRed Deer

CalgaryMedicine Hat

Edmonton0% 10% 20% 30%

4.2%

4.6%

5.3%

5.4%

6.1%

10.4%

29.4%

5.6%

Apartment Vacancy Rates Oct 2015


CALGARY ECONOMYSUMMARYQ4-2015

2

Approximately 20,750 Calgarians were receiving regular Employment Insurance (EI) benefits in December 2015, up 2.7 per cent from November 2015 and up 105 per cent compared to a year earlier.

WEEKLY EARNINGS

The average weekly earnings (AWE) of payroll employees in Calgary remained unchanged in November 2015 at $1,128 compared to the previous month. Year-over-year, average weekly earnings rose by $12 or 1.1 per cent in November 2015. In Alberta, average weekly earnings dropped to $1,130 in November 2015 from $1,135 the previous month. And while weekly earnings in the province were down by $28 or 2.4 per cent year-over-year, Albertans still earned $179 more per week in November 2015 than the average Canadian ($951).

Calgary

Alberta

Canada

$0 $300 $600 $900$1,200

$951

$1,130

$1,128

Average Weekly Earnings Nov 2015

EMPL. INSURANCE

Approximately 20,750 Calgarians were receiving regular EI benefits in December 2015, up 105 per cent compared to a year earlier. There were 62,480 Albertans receiving regular EI benefits in December 2015, double the 31,220 people receiving benefits in December 2014. Despite the jump in the number of regular EI recipients in December 2015, only 2.5 per cent of Alberta’s labour force were collecting benefits, which was below the national average of 2.8 per cent.

Dec 2015

Nov 2015

Dec 2014

0 8,000 16,00024,000

10,140

20,210

20,750

Calgary EI Beneficiaries

OFFICE MARKET

Calgary’s overall downtown office vacancy rate continued to rise in the final quarter of 2015, increasing to 16.4 per cent from 13.9 per cent the previous quarter and from 8.2 per cent in the fourth quarter of 2014. Looking ahead, with four new office developments to hit the market by 2018, Cresa projects the office vacancy rate in downtown Calgary to continue to rise, reaching a peak of about 21 per cent in 2018.

Q4 2015

Q3 2015

Q4 2014

0% 5% 10% 15% 20%

8.2%

13.9%

16.4%

Calgary Downtown Office Vacancy Rates


ALBERTA ECONOMYSUMMARYQ4-2015

3

Alberta energy companies continued to layoff workers and cut capital spending in the final quarter of 2015, as oil prices fell further to an average of $US37 per barrel in December.Alberta Economy

ECONOMIC GROWTH

The economic downturn in Alberta is expected to be more protracted than previously forecast, and the Conference Board of Canada (CBoC) now projects real GDP in the province to contract by 1.2 per cent in 2015. The CBoC projects positive growth of 1.2 per cent for the Alberta economy in 2016. The Alberta government (GoA) was not as optimistic in its third quarter fiscal update - forecasting Alberta’s GDP to contract by 1.1 per cent in 2016.

2014

2015F

2016F (CBoC)

2016F (GoA)

-4%-2%0% 2% 4% 6%

-1.1%

1.2%

-1.2%

4.4%

Alberta GDP Growth

OIL PRICES

The price of West Texas Intermediate (WTI) crude oil started the year at an average of US$47 per barrel in January 2015. Prices peaked in June at close to US$60 per barrel, but deteriorated in the second half of 2015, dropping to about US$37 per barrel in December. In the final quarter of 2015, WTI crude prices averaged US$42 per barrel, down from US$46 per barrel the previous quarter. Year-over-year, crude prices were down 42 per cent from an average of US$73 in the fourth quarter of 2014. WTI crude is forecast to average US$40 per barrel in 2016.

Q4 15

Q3 15

Q2 15

Q1 14

Q4 14

$0 $25 $50 $75

$73

$49

$58

$46

$42

WTI Prices, Quarterly Avg. (US$/bbl)

DRILLING RIGS

There was an average of 168 active drilling rigs in western Canada during the final quarter of 2015, down 56 per cent year-over-year. In 2015, the number of active drilling rigs in western Canada declined to an average of 184 from 370 in 2014, representing a 50 per cent decline. Rig utilization dropped to 24 per cent in 2015, from 46 per cent in 2014. The Canadian Association of Oilwell Drilling Contractors projects the number of active drilling rigs in western Canada to decline to an average of 159 in 2016, while rig utilization is forecast to fall to 22 per cent.

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

0 100 200 300 400

384

291

95

182

168

Active Rigs, Quarterly Avg.,W.Canada


ALBERTA ECONOMYSUMMARYQ4-2015

4

1,067 Albertans filed for personal bankruptcy in the third quarter of 2015, down 3.0 per cent from the previous quarter. Low interest rates is one of the factors keeping personal bankruptcies well contained.

BANKRUPTCIES

In the third quarter of 2015 (most recent stats), 1,067 Albertans filed for personal bankruptcy, down 3.0 per cent from the previous quarter but up 19 per cent from 898 bankruptcies in the third quarter of 2014. While personal bankruptcies have increased year-over-year, they are nowhere near the peak reached in the third quarter of 2009 (2,917). According to ATB Financial’s Todd Hirsch, there are three main factors keeping personal bankruptcies well-contained: households with two income earners, severance packages and low interest rates.

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

0 300 600 900 1,200

898

893

997

1,099

1,067

Personal Bankruptcies in Alberta

RETAIL SALES

Retail sales in Alberta totaled $6.12 billion in December 2015, down 3.1 per cent compared to the previous month and down 5.5 per cent year-over-year. Retail sales fell by an estimated 3.3 per cent in 2015, following robust growth of 7.5 per cent the previous year. For 2016, forecasts for growth in Alberta retail sales are weak, ranging from a slight contraction of -0.2 per cent (TD Economics) to growth of 2.5 per cent (Conference Board of Canada).

2014

2015F

2016F

-8% -4% 0% 4% 8%

-0.2%

-3.3%

7.5%

Alberta Retail Sales Growth

POPULATION

For the 19th consecutive quarter, Alberta recorded the highest quarterly population growth rate in Canada in the third quarter of 2015, though the margin was slim. The province’s population grew by 20,418 or 0.49 per cent to an estimated 4,216,875. Saskatchewan had the next highest population growth rate at 0.46 per cent, followed by British Columbia (+0.44 per cent), Ontario (+0.42 per cent) and Manitoba (+0.40 per cent). Alberta posted the highest annual population growth rate among provinces in the third quarter of 2015 at 1.68 per cent (+69,800).

NLPENSNBQCONMBSKABBC

-3% -2% -1% 0% 1% 2% 3%0.85%

1.68%1.09%1.09%

0.87%0.57%

-0.12%0.15%

-0.13%-0.85%

Annual Pop. Growth Rates Q3 2015


CANADIAN ECONOMYSUMMARYQ4-2015

5

Following a mild recession, the Canadian economy managed positive GDP growth in the second half of 2015. However, growth again came in below expectations in the fourth quarter, putting the average for 2015 at just 1.2 per cent, the lowest rate since 2009. Growth is expected to improve in 2016 and 2017, but will be largely dependent on a pickup in the global economy and a gradual recovery in oil prices.

ECONOMIC GROWTH

Following a mild recession during the first half of 2015, the economy managed positive growth in the final two quarters. However, after a strong rebound in the summer months, growth again disappointed in the fourth quarter at just 0.3 per cent. Weakness in the energy sector has apparently spread to other areas of the economy, and real GDP grew by an estimated average of 1.2 per cent in 2015, the lowest reading since 2009.Canadian Economy

Q1 2015

Q2 2015

Q3 2015

Q4 2015

-1% 0% 1% 2% 3%

Real GDP Growth

TRADE

Following an outsized gain of nearly 10 per cent in the third quarter, exports disappointed again in the final quarter of the year. Exports were expected to be a major source of growth in 2015 given the significant depreciation of the loonie, but was dampened by weak global demand. The good news is that the trade balance has improved, but this was mostly due to a reduction in imports. Trade will be counted on to propel growth over the next two years, given a limited investment outlook and a slowing consumer sector.

Q1 2015

Q2 2015

Q3 2015

Q4 2015

-2% 2% 6% 10%

Export Growth

INVESTMENT

Investment spending was one of the weakest aspects of the Canadian economy in 2015 and contracted by an estimated 7 per cent. While the rate of decline subsided over the course of the year, investment spending is not expected to reach a positive reading until at least mid-2016. Plunging commodity prices drove much of the decline in 2015, but weakness in investment spending was widespread throughout the economy, even in sectors not directly affected by low oil prices.

Q1 2015

Q2 2015

Q3 2015

Q4 2015

-20%-15%-10% -5% 0%

Non-Residential Investment


GLOBAL/U.S. ECONOMYSUMMARYQ4-2015

6

The global growth outlook is characterized by a continued slowdown in emerging economies, with China’s downturn putting downward pressure on trade and commodity prices. The U.S. economy is powering up; and the Euro Area is slowly and divergently recovering.Global/U.S.Economy

GLOBAL GROWTH

Global economic growth averaged a disappointing 2.4 per cent in 2015, down from 2.6 per cent in 2014. The low reading was mainly a reflection of slowing growth across key emerging economies, low commodity prices impacting revenues for exporters, diminished investment flows, subdued trade, and bouts of financial market volatility. The fourth quarter was characterized by further economic deceleration in major emerging markets, notably China, and a slight pickup across most advanced economies.

2015

2016F

2017F

0% 1% 2% 3% 4%

Global Real GDP Growth

EURO AREA

The slowdown across many major emerging markets, an additional bailout for Greece following its election, the ongoing Russia-Ukraine conflict, and the large influx of migrants from the Middle East played a role in limiting growth in the euro area late in 2015. Positive fourth quarter developments that should act to encourage growth in 2016 and 2017 included a steadily declining overall unemployment rate in the region, along with a 3-year, €300 billion spending program undertaken by the European Commission to stimulate investment.

2015

2016F

2017F

0% 1% 2%

Euro Area Real GDP Growth

U.S.

Despite weak estimated GDP growth of just 0.7 per cent in the fourth quarter, the U.S. was among the best performing advanced economies in 2015. A highlight of the U.S. economy was its strengthening labour market, which late in the fourth quarter prompted the Federal Reserve to increase its overnight interest rate for the first time in seven years. While the overall growth outlook remains relatively moderate in the 2 to 3 per cent range, this is in stark contrast to a very fragile and uncertain global economic climate.

2015

2016F

2017F

0% 1% 2% 3%

U.S. Real GDP Growth


LABOUR FORCE STATISTICSSUMMARYQ4-2015

7

The number of unemployed people in the Calgary CMA averaged 60,100 in the fourth quarter of 2015, relatively unchanged from the previous quarter but up nearly 20,000 year-over-year.

CALGARY

Calgary’s unemployment rate hit 7.0 per cent in December 2015, marking the third time in 2015 the unemployment rate has reached this level. Prior to August 2015, Calgary had not recorded an unemployment rate of 7.0 per cent since June 2010. Overall, Calgary’s unemployment rate averaged 6.9 per cent in the final quarter of 2015, unchanged from the previous quarter but up significantly from 4.8 per cent in the fourth quarter of 2014.

Calgary’s labour force participation rate averaged 73.0 per cent in the final quarter of 2015, down from 74.1 per cent the previous quarter and 73.2 per cent year-over-year.

ALBERTA

Alberta’s unemployment rate averaged 6.8 per cent in the fourth quarter of 2015, up from 6.3 per cent the previous quarter and 4.5 per cent year-over-year.

On average, there were 168,200 unemployed people in Alberta in the final quarter of 2015, up 13,200 quarter-over-quarter and 59,000 year-over-year.

The number of long-term unemployed in Alberta (those jobless for 27+ weeks) more than doubled to 25,400 in December 2015, from 10,600 in December 2014, and accounted for 15.5 per cent of the total unemployed in the province.

CANADA

Canada’s unemployment rate averaged 7.1 per cent in the fourth quarter of 2015, up from 7.0 per cent the previous quarter and 6.7 per cent year-over-year.

Saskatchewan had the lowest average unemployment rate among provinces in the final quarter of 2015 at 5.5 per cent, followed by Manitoba (5.8 per cent) and British Columbia (6.4 per cent).

Forecasts for Canada’s unemployment rate are in the range of 7.1 to 7.3 per cent for 2016 and 7.0 to 7.1 per cent for 2017.

Labour Force Statistics


Labour Force Survey Stats Q4 Calgary Alberta Canada

✓ Participation Rate 73.0% 72.9% 65.9%

✓ Employment Rate 67.9% 67.9% 61.2%

✓ Unemployment Rate 6.9% 6.8% 7.1%

LABOUR FORCE STATISTICSSUMMARYQ4-2015

8

CALGARY

Employment in the Calgary CMA was little changed in the final quarter of 2015, up 1,500 (+0.2 per cent) compared to the fourth quarter of 2014.

Part-time employment in Calgary increased by 11.5 per cent year-over-year in the fourth quarter of 2015, while full-time employment declined by 2.0 per cent.

Year-over-year, employment growth for women (+2.5 per cent) was partially offset by employment losses for men (-1.6 per cent) in the final quarter of 2015.

ALBERTA

Year-over-year, employment in Alberta was down by 4,900 or 0.2 per cent in the final quarter of 2015.

Full-time employment declined by 31,100 year-over-year in the fourth quarter, outweighing the 26,200 increase in part-time employment.

On an annual basis, employment for men declined significantly in the fourth quarter (-23,700), outweighing gains in employment for women (+18,800).

CANADA

Canadian employment rose by 140,900 or 0.8 per cent year-over-year in the fourth quarter of 2015.

Annual employment gains were skewed toward full-time employment (+174,700) as part-time jobs declined by 33,800.

Among the major age groups in Canada, only those aged 55+ recorded annual employment growth in the final quarter of 2015 (+5.6 per cent). Employment declined 2.0 per cent among youth aged 15 to 24 and 0.1 per cent among those aged 25 - 54.


Canada

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

-2% -0% 2% 4% 6% 8% 10% 12%

9.8%

4.4%

1.7%

11.2%

6.3%

3.3%

3.0%

3.1%

-1.2%

4.4%

5.6%

Annual Employment Growth for Adults (aged 55+), Canada and Provinces, Q4 2015

INDUSTRY EMPLOYMENT SUMMARY

Industry Employment

These are the industries that posted the greatest annual change in employment in Calgary, Alberta and Canada in Q4 2015.

Calgary Highlights

Health Care and Social Assistance

+9,900 jobs

Accommodation and Food Services

+9,000 jobs

Construction

-7,900 jobs

Forestry, Fishing, Mining, Oil and Gas

-7,200 jobs

Alberta Highlights

Public Administration

+13,900 jobs


+13,500 jobs


-19,800 jobs

Other Services

-11,500 jobs

Canada Highlights


+79,400 jobs

Prof., Scientific and Technical Services

+53,500 jobs

Accommodation and Food Services

-25,400 jobs


-23,800 jobs


Q4-2015

9

EMPLOYER SURVEYSUMMARYQ4-2015

10

Employer Survey

Survey Results: 201 micro-sized employers with <10 employees were surveyed in Q4 2015.

PAST GROWTH

On balance, 4 per cent of employers reported that their company expanded in the 12 months prior to their survey, compared to 7 per cent expansion in Q4 2014.

Employers surveyed in Q4 2015 reported the lowest rate of company expansion since 2013. While the Q4 expansion rate was down in 2015, companies did not downsize as they did in 2009.

2015201420132012201120102009

-30% -20% -10% 0% 10%

Q4 Company Expansion

FUTURE GROWTH

On balance, only 6 per cent of employers anticipate a business expansion in the 12 months following their survey, down significantly from 23 per cent in Q4 2014.

Employers surveyed in Q4 2015 reported a substantially lower rate of anticipated company expansion than in all previous years. The change in Q4 2015 could indicate that companies are less optimistic because of current economic conditions.

2015201420132012201120102009

0% 10% 20% 30%

Q4 Anticipated Company Expansion

LAYOFFS

Eleven per cent of employers reported that they laid off workers in the 3 months prior to their survey, compared to 9 per cent in Q4 2015.

Employers surveyed in Q4 2015 reported a higher rate of layoffs than in all previous years except for 2009.

Overall, employers reported about 67 people were laid off, representing a layoff rate of 7.3 per cent. The highest number of layoffs were reported in the construction, manufacturing and wholesale and retail trade industries.

2015201420132012201120102009

0% 10% 20%

Q4 Layoffs



11

The most frequently reported vacant positions were administrative officers, real estate agents and salespersons, other financial officers and advertising, marketing and public relations professionals.

The positions employers reported the most difficulty recruiting were cashiers, accommodation service managers, graphic designers and illustrators and technical wholesale specialists.

The positions employers reported had the highest voluntary turnover were retail salespersons, cashiers, construction trades helpers and labourers and administrative officers.

Twenty-nine per cent of employers reported approximately 133 employees left as a result of voluntary turnover in the 12 months prior to their survey. Overall, the voluntary turnover rate was 14.6 per cent.

PAST RECRUITMENT

Employers were asked if they had difficulty recruiting qualified employees in the 12 months prior to their survey. Twenty-two per cent of employers reported difficulty recruiting, down from 29 per cent in Q4 2014.

201520142013201220112010

0% 20% 40%

Q4 Past Difficulty

FUTURE RECRUITMENT

Employers were asked if they anticipated having more, less or the same difficulty recruiting qualified employees in the 12 months following their survey. In Q4 2015, on balance, 17 per cent anticipated less difficulty recruiting, the lowest since at least 2010.

201520142013201220112010

-20% -5% 10%

Q4 Future Difficulty

PAST TURNOVER

Employers were asked if they had any voluntary turnover in the 12 months prior to their survey. Twenty-nine per cent of employers reported voluntary turnover, down from 41 per cent in Q4 2014.

201520142013201220112010

0% 25% 50%

Q4 Past Turnover

FUTURE TURNOVER

Employers were asked if they anticipated voluntary turnover would be higher, lower or the same in the 12 months following their survey. On balance, 8 per cent anticipated less voluntary turnover, unchanged from the Q4 2014 results.

201520142013201220112010

-15% -10% -5% 0%

Q4 Future Turnover



12

✓ Employers reported word of mouth/employee referrals and career and classified websites were the most successful recruitment resources for attracting workers in the 12 months prior to their survey.

✓ Employers reported providing a positive work environment and excellent management/supervision were the most successful employee retention strategies in the 12 months prior to their survey.

Word of mouth/employee referralsCareer and classified websitesWalk-ins/unsolicited resumes

Industry associationsSocial media

Employment agenciesCompany website/internal postings

NewspapersColleges/universities

SignageJob fairs

Technical/trade institutesAlberta Works/emloyment resource centres

Unsure 3%1%1%1%1%2%3%3%3%3%4%5%

16%58%

Positive work environmentExcellent management/supervision

Interesting/challenging workCompetitive salary

Flexible work measuresJob security

Competitive benefits packagePerks

Cash bonusesCompany culture

Excellent coworkersLearning/growth opportunities

Excellent communicationEmployee engagement

OtherUnsure

None 18%7%

1%1%1%1%1%

2%2%2%2%

6%9%

10%12%12%

13%



13

“Employee training and development is a top priority for our company.”

Almost half (48 per cent) of employers strongly agreed or agreed that employee training and development is a top priority in their company. Only 13 per cent of employers disagreed or strongly disagreed.

Sixty per cent of the professional, scientific and technical services and 58 per cent of the wholesale and retail trade employers agreed that employee training and development is a top priority in their company. Only 30 per cent of the other industry employers agreed.

Employers reported that the biggest challenge faced by their companies in terms of training employees was “Time constraints - too busy.”

Time constraints - too busyManaging employees' diverse learning needs - knowing what training is relevant and available

Too costly/not in budgetEmployees aren’t interested in training

Finding employees to trainTurnover - employees leave once trained

The locations where employees work are not near the trainingLack of internal trainers to administer the training

The labour force is uneducated/unskilledEnglish is a second language for many of our employees - language barrier

The length of training that is requiredUnsure

Employees don't need training - they are fully trainedNone 18%

15%8%

1%1%1%

2%4%

5%6%6%

8%12%

13%


2%6%

22%

29%

41%

Strongly AgreeAgreeNeutralDisagreeStrongly disagree

6%7% 39%

20%28%

The Economy

Calgary Region EconomyThis section includes a discussion of: Economic Growth, Inflation, Housing, Rental Market, Non-Residential Building Construction, Average Weekly Earnings, Employment Insurance and Office Market.

Economic GrowthCalgary’s economy continued to weaken in the final quarter of 2015. Real Gross Domestic Product (GDP) is now forecast to contract by 0.5 per cent in 2015, following robust growth of 5.1 per cent in 2014.

The goods-producing sector is forecast to contract by 2.6 per cent in 2015. Construction output will fall sharply, by an estimated 8.0 per cent, as housing starts in Calgary declined 24 per cent in 2015. Similarly, primary and utilities output is expected to shrink for the first time in six years by 1.6 per cent, as oil prices continued to decline in the final quarter. Manufacturing output growth is projected to be weak at 0.7 per centServices sector output growth is projected to be modest in 2015 at 1.3 per cent, down from growth of 4.6 per cent the previous year.

“[...] services sector activity will slow sharply this year because Calgary is the head-office hub of Canada’s oil and gas sector and also home to numerous energy-related services companies. Indeed, business services output is forecast to grow at its slowest rate in five years [+0.5 per cent]. Transportation and warehousing output is also forecast to slow [+0.3 per cent] as the slowing economy reduces shipping needs. Finally, we expect output to fall in wholesale and retail trade and in personal services as anxious consumers tighten their purse strings.” 1

!2.6%&

!1.3%&

!0.4%&

0.3%&

1.9%&

3.3%&

!0.5%&

!4.0%&!3.0%&!2.0%&!1.0%&0.0%& 1.0%& 2.0%& 3.0%& 4.0%&

Industrial&

Wholesale&&&retail&trade&

Personal&services&

TransportaAon&&&warehousing&

Office&

Non!comercial&services&

All&industries&

%"change"

Calgary"CMA"Real"GDP"Growth"by"Industry"2015"Forecast"(annual"growth"rate)"

Source: Conference Board of Canada, Metropolitan Outlook 1, Autumn 2015. The office sector includes the information and culture, finance, insurance and real estate, business services

and public administration industries. The industrial sector includes the manufacturing, construction and primary and

utilities industries.


1 Conference Board of Canada, Metropolitan Outlook 1, Autumn 2015, p.4.

THE ECONOMYThe Calgary region economy is affected by global and U.S. economic activity and by economic drivers in the Canadian economy and elsewhere in Alberta.

14

Looking ahead, improved performance in Calgary’s primary and utilities (+2.7 per cent) and manufacturing industries (+2.1 per cent) along with growth in the services sector (+2.4 per cent) is expected to drive a real GDP growth rate of 1.8 per cent in 2016. Unfortunately, the construction industry is not expected to recover in 2016, with construction output forecast to contract a further 5.0 per cent.

“[...] non-energy non-residential investment activity is expected to remain relatively busy in the near term, with projects such as the $3-billion StoneGate Landing mixed-use commercial development, the $1-billion Brookfield Place, and the $500-million Oxford Airport Business Park, already under construction. Moreover, new projects announced for 2016 include the $600-million expansion of Bonnybrook Wastewater Treatment Plant D and the approximately $200-million Stoney CNG bus storage and transit facility, which will house about 400 buses, two steam bays, and an on-site compressed natural gas fuelling infrastructure. Unfortunately, non-residential activity will not be able to counter the decline in housing starts and the drop in energy-related non-residential investment.” 2

InflationConsumer prices in Calgary rose 1.5 per cent in the twelve months to December 2015, following a 2.0 per cent increase the previous month. Calgary recorded year-over-year price growth across all major consumer categories in December, with the highest growth rates observed in alcoholic beverages and tobacco (+8.7 per cent) and food (+3.7 per cent). Inflation continued to be held in check by lower water, fuel and electricity prices (-9.7 per cent y/y) and gasoline prices (-7.0 per cent y/y). Excluding energy and food, inflation was up 2.2 per cent year-over-year in December 2015.

“Overall, higher prices [in December] were observed in food and other imported products as they were driven by a lower Canadian dollar. The inflation rate should

!6.0%&

!4.0%&

!2.0%&

0.0%&

2.0%&

4.0%&

6.0%&

2009&

2010&

2011&

2012&

2013&

2014&

2015f&

2016f&

2017f&

2018f&

2019f&

Calgary'CMA.'Annual'Real'GDP'Growth'Rates,''Actual'and'Forecast'(%)'

Source: Conference Board of Canada

0.1%%0.3%%

1.0%%1.2%%

2.0%%2.5%%

3.7%%8.7%%

1.5%%

0.0%% 2.0%% 4.0%% 6.0%% 8.0%% 10.0%%

Shelter%Clothing%and%footwear%

Recrea>on,%educa>on%and%reading%Transporta>on%

Household%ops.,%furnishings%&%Health%and%personal%care%

Food%Alcoholic%beverages%and%tobacco%AllJitems%Consumer%Price%Index%

12#month)per)cent)change)

Consumer)Price)Index,)Calgary,)Nov.)and)Dec.)2015)12#Month)Change)in)the)Major)Components)

NovJ15% DecJ15%

Source: Statistics Canada, CANSIM table 326-0020.


2 Conference Board of Canada, Metropolitan Outlook 1, Autumn 2015, p.4.

15 THE ECONOMY

continue to stay moderate in the coming months aided by lower energy costs.” 3

Alberta’s inflation rate was also 1.5 per cent in December 2015, down from 2.0 per cent the previous month. At the national level, the annual increase in the Consumer Price Index (CPI) was 1.6 per cent in December, up from 1.4 per cent in November. Consumer prices rose in every province in the twelve months to December 2015 and Alberta and Manitoba recorded the fourth highest inflation rate (1.5 per cent) after British Columbia (+1.9 per cent), Saskatchewan (1.8 per cent) and Ontario (1.7 per cent).4 The Calgary CMA’s rate of inflation is forecast to average 1.5 per cent in 2016.5

HousingCalgary builders started approximately 3,200 housing units in the fourth quarter of 2015, a 3.8 per cent decline from the final quarter of 2014. Single-family starts were down 28 per cent year-over-year to 1,028 units, while multi-family starts increased 14 per cent to 2,174 units. Total starts in the Calgary area reached 13,033 units in 2015, down 24 per cent compared to the previous year. Single-detached starts were down 36 per cent from 2014 to 4,138 units, while multi-family starts declined 16 per cent to 8,895 units.

“New home demand in 2015 has moderated as employment, migration and consumer confidence have been impacted by low oil prices.” 6

Despite the year-over-year decline, 2015 marked the second highest number of total annual starts for the Calgary CMA since 2007 (2014 was a record year for housing starts). During the last recession in 2009, total housing starts in the Calgary area dropped to 6,318 units.7

Weakness in the single-family sector in the fourth quarter of 2015 pushed total housing starts in the Edmonton CMA down 7.4 per cent year-over-year to about 3,550 units. A 38 per cent decline in single-family starts (1,188 units) outweighed the 23 per cent increase in multi-family starts (2,363 units). In

!1.0%&

0.0%&

1.0%&

2.0%&

3.0%&

4.0%&

5.0%&

Dec!12

&

Feb!13&

Apr!13&

Jun!13&

Aug!13&

Oct!13&

Dec!13

&

Feb!14&

Apr!14&

Jun!14&

Aug!14&

Oct!14&

Dec!14

&

Feb!15&

Apr!15&

Jun!15&

Aug!15&

Oct!15&

Dec!15

&

All#Items)Consumer)Price)Index)Year#Over#Year)Per)Cent)Change)

Canada& Alberta& Calgary&

Source: Statistics Canada, CANSIM table-326-0020.


3 City of Calgary, December 2015 Inflation Review, January 22, 2016.

4 Statistics Canada CANSIM table 326-0020.

5 City of Calgary, Calgary and Region Economic Outlook, 2015 - 2020, Fall 2015, p.16.

6 Calgary Herald, Calgary region housing starts down from previous-year levels, Mario Toneguzzi, January 11, 2016.

7 Ibid.

16 THE ECONOMYTHE ECONOMY

2015, total housing starts in the Edmonton CMA reached 17,050 units, up 23 per cent compared to 2014. Multi-family starts jumped 61 per cent from 2014 to 11,367 units, while single-family starts fell 17 per cent to 5,683 units.

Housing Starts, Alberta, Calgary and Edmonton, Q4 2014 and Q4 2015

Area Q4 2014 Q4 2015 Q4 2014 Q4 2015 Q4 2014 Q4 2015

Alberta 4,339 2,843 4,481 4,848 8,820 7,691 -12.8%

Calgary CMA 1,422 1,028 1,906 2,174 3,328 3,202 -3.8%

Edmonton CMA 1,908 1,188 1,926 2,363 3,834 3,551 -7.4%

Single Multiple Total % Change 2014-2015

Source: Canada Mortgage and Housing Corporation

New housing prices in the Calgary CMA were down almost 1.0 per cent in December 2015, according to Statistics Canada’s New Housing Price Index (NHPI). Nationally, new home prices rose 1.6 per cent year-over-year. New housing prices in the Edmonton CMA were relatively unchanged in December (+0.1 per cent), while the Saskatoon, Regina, Quebec, Victoria, Ottawa and Charlottetown CMAs all posted annual price declines.

“In the Prairie region, Saskatoon (-1.3%), Regina (-1.2%) and Calgary (-0.9%) all posted 12-month price declines in December. This was the largest year-over-year decrease in Calgary since December 2009. Year over year, price increases for new homes in the Prairie region slowed steadily in the first eight months of the year and were followed by four consecutive declines.” 8

The Toronto-Oshawa region (+4.1 per cent) was the top contributor to the national gain in December 2015.

!1.5% !1% !0.5% 0% 0.5% 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5%

Saskatoon%Regina%Quebec%Calgary%Victoria%

O?awa!GaBneau%Charlo?etown%

Windsor%Edmonton%St.%John's%

Saint%John!Fredericton!Moncton%Halifax%

Montreal%Winnipeg%Vancouver%

Toronto!Oshawa%Canada%

12#month)%)change)

New)Housing)Price)Index)(12#month)change))Canada)and)Select)CMAs)in)Canada,)December)2015)



8 Statistics Canada, The Daily, New Housing Price Index, December 2015, February 11, 2016.

17 THE ECONOMYTHE ECONOMY

Turning to the resale market, residential sales in the Calgary CMA were down 31 per cent year-over-year in the final quarter of 2015, following a 27 per cent year-over-year decrease the previous quarter. For 2015 as a whole, residential sales in the Calgary CMA totaled 23,994, down 29 per cent from 33,615 sales in 2014.9

“Economic uncertainty, followed by weak economic conditions and job losses, contributed to slowing housing demand throughout the year [...] That said, while aggregate prices trended down in 2015, it was not to the same extent as some had speculated. Supply levels were low moving into this cycle and thus provided some cushion to absorb the inventory gains.” 10

The average price for an existing home in the Calgary CMA declined 3.3 per cent year-over-year in the fourth quarter of 2015 to $446,340. In 2015, the average price for an existing home in the Calgary CMA was $453,814 down 1.5 per cent compared to 2014.11 Calgary Real Estate Board President Corrine Lyall cautions that aggregate statistics often do not provide the full story as activity varies by product type, price ranges and location.

“While prices have trended down this year citywide, there are some areas of the city where prices for detached homes have improved compared to the start of the year.” 12

Existing home sales in the City of Calgary totaled 18,830 in 2015, down 26 per cent from 2014. Sales are projected to decline a further 2.2 per cent in 2016 to 18,416. The annualized benchmark price for the City of Calgary is forecast to decline 3.4 per cent in 2016 to $438,652.

“Calgary’s housing market will start 2016 in buyers’ market territory. With higher levels of inventory in the rental, new home and resale market, there will be less room to absorb further supply gains caused by weak economic conditions.” 13


9 Canada Mortgage and Housing Corporation, Housing Now Tables Calgary CMA, January 2016, p.26.

10 Calgary Real Estate Board, Calgary Regional Housing Market Statistics, December 2015, p.1.

11 Canada Mortgage and Housing Corporation, Housing Now Tables Calgary CMA, January 2016, p.26.

12 Calgary Real Estate Board, Calgary Regional Housing Market Statistics, December 2015, p.1.

13 Calgary Real Estate Board, 2016 Economic Outlook and Regional Housing Market Forecast, January 2016, p.4.

18 THE ECONOMY

Rental MarketCalgary’s apartment vacancy rate jumped to 5.3 per cent in October 2015, from 1.4 per cent the previous year, and tied for the highest vacancy rate since 1993.14 Calgary had the fourth highest vacancy rate among the major CMAs in Canada in October 2015, behind Saint John (8.5 per cent), Saskatoon (6.5 per cent) and Regina (5.4 per cent).

“Rental demand has been weighed down by job losses due to a slowdown in the economy, primarily from the energy industry. Labour market conditions have weakened and the unemployment rate has moved to elevated levels, moderating net migration. Competition from investor owned condominium apartment units and the addition of new purpose-built rental units has also contributed to a rise in the vacancy rate.” 15

The average rental price for a two-bedroom apartment unit in the Calgary CMA rose 0.8 per cent to $1,332 per month in October 2015, from $1,322 per month in October 2014. In Edmonton, the average rent for a two-bedroom unit increased 2.6 per cent year-over-year to $1,259 per month. Among the major CMAs in Canada, Calgary had the second highest average rent for a two-bedroom apartment, behind Vancouver ($1,368). Saint John ($718), Montreal ($760) and Quebec ($788) had the lowest average rental prices in October 2015.

8.5%%6.5%%

5.4%%5.3%%

4.7%%4.2%%4.0%%4.0%%

3.4%%3.4%%3.3%%

2.9%%1.6%%

0.8%%0.6%%

0.0%% 2.0%% 4.0%% 6.0%% 8.0%% 10.0%%

Saint%John%Saskatoon%

Regina%Calgary%%

St.%John's%Edmonton%Montreal%Quebec%Halifax%OLawa%Canada%

Winnipeg%Toronto%

Vancouver%Victoria%

Vacancy&Rate&

Private&Apartment&Vacancy&Rates&in&Select&CMAs&and&Canada,&October&2014&and&2015&

2014%

2015%


!$718!!!$760!!!$788!!

!$923!!!$949!!

!$1,045!!!$1,048!!!$1,087!!!$1,097!!!$1,128!!!$1,159!!

!$1,259!!!$1,288!!!$1,332!!!$1,368!!

!$(100)! !$400!! !$900!! !$1,400!!

Saint.!John!Montreal!Quebec!

St.!John's!Canada!

Winnipeg!Halifax!

Saskatoon!Regina!Victoria!OOawa!

Edmonton!Toronto!Calgary!!

Vancouver!

Private(Apartment(Average(Rents((22bedroom)(in(Select(CMAs(and(Canada,(October(2014(and(2015(

2014!

2015!



14 Canada Mortgage and Housing Corporation, Rental Market Report Calgary CMA, Fall 2015, p.2.

15 Ibid.

19 THE ECONOMY

Non-Residential Building ConstructionInvestment in non-residential building construction in the Calgary CMA, which includes commercial building, industrial developments and institutional and government construction, totaled $1.14 billion in the fourth quarter of 2015, up 8.4 per cent from the final quarter of 2014.

Investment in commercial construction projects makes up over 70 per cent of non-residential construction spending in Calgary. Investment in Calgary’s commercial sector was down 6.5 per cent year-over-year in the final quarter of 2015. Investment in institutional and governmental projects more than doubled to $289.6 million, the highest level since the first quarter of 2011, while investment in industrial structures declined 30 per cent to $30.3 million.

In Alberta, developers spent $2.74 billion on non-residential construction projects this quarter, a 2.6 per cent decrease compared to the final quarter of 2014. A 90 per cent increase in spending on institutional and governmental structures (mainly educational buildings) was offset by a 50 per cent drop in spending on industrial projects and a 9.3 per cent decline in commercial construction.

“Investment in industrial projects declined 2.1% nationally to $1.5 billion, largely as a result of lower spending on the construction of primary sector and utilities buildings. Four provinces recorded lower investment in industrial projects in the fourth quarter. The largest decrease occurred in Alberta, where investment fell 20.7% to $238 million [quarter-over-quarter, and 50 per cent year-over-year]. This decline stemmed primarily from lower spending on buildings linked to the petroleum industry, such as maintenance and utilities buildings, continuing the downward trend that began in the first quarter of 2015.” 16

Average Weekly EarningsThe average weekly earnings (AWE) of payroll employees in Calgary remained unchanged in November 2015 at $1,128 compared to the previous month. Year-over-year, average weekly earnings rose by $12 or 1.1 per cent in November 2015.17

0"200"400"600"800"1000"1200"1400"

Q1"20

07"

Q1"20

08"

Q1"20

09"

Q1"20

10"

Q1"20

11"

Q1"20

12"

Q1"20

13"

Q1"20

14"

Q1"20

15"

$"millions"

Investment"in"Non.Residen1al"Building"Construc1on,"Calgary"CMA"

Commercial" Ins9tu9onal"and"governmental" Industrial"



16 Statistics Canada, The Daily, .Investment in non-residential building construction, fourth quarter 2015, January 18, 2016.

17 CMHC, Housing Now Tables - Calgary CMA, January 2016, p.27.

20 THE ECONOMY

In Alberta, average weekly earnings dropped to $1,130 in November 2015 from $1,135 the previous month, the third consecutive monthly decline. And while weekly earnings in the province were down by $28 or 2.4 per cent year-over-year, Albertans still earned $179 more per week in November 2015 than the average Canadian ($951). However, the gap between wages in Alberta and the rest of the country has narrowed.

“After the first peak in 2009, the gap between wages in Alberta and Canada dropped nearly three percentage points. And since the peak in 2014, the gap has tumbled five percentage points (and it may keep falling). [...] The pullback in the wage gap is the result of the loss of good paying jobs in oil and gas being partially replaced by a gain of lower paying jobs in other sectors. It also reflects fewer overtime hours worked.” 18

Within Alberta, average weekly earnings varied significantly by industry. In November 2015, the highest weekly wages were in the mining and oil gas extraction industry, however, they declined nearly 4.0 per cent year-over-year to $2,151. Weekly earnings in management of companies and enterprises were the second highest at $2,010, up 2.8 per cent from November 2014. Within the trade industry, wholesale trade weekly earnings rose 0.5 per cent year-over-year to $1,308 in November 2015, while retail trade earnings declined 0.9 per cent to just $604 per week. The lowest average weekly earnings were recorded in the accommodation and food services industry, which dropped 4.4 per cent year-over-year to $414. On average, weekly wages for Albertans employed in the administrative and support services industry increased 10.6 per cent to $1,038, while weekly wages for construction workers in the province fell over 5.0 per cent to $1,443.

!$1,158!!!$1,130!!

!$1,116!! !$1,128!!

!$938!! !$951!!

!$900!!

!$950!!

!$1,000!!

!$1,050!!

!$1,100!!

!$1,150!!

!$1,200!!

Nov/14!

Dec/14

!

Jan/15!

Feb/15!

Mar/15!

Apr/15!

May/15!

Jun/15!

Jul/1

5!

Aug/15!

Sep/15!

Oct/15!

Nov/15!

Average'Weekly'Earnings'(including'over5me)'Alberta! Calgary! Canada!

Source: CMHC and Statistics Canada CANSIM table 281-0049

Industry Nov-14 Nov-15 % changeMining and oil and gas extraction 2,238$ 2,151$ -3.9%Management of companies & enterprises 1,955$ 2,010$ 2.8%Utilities 2,005$ 1,992$ -0.7%Professional, scientific & technical services 1,558$ 1,542$ -1.0%Construction 1,522$ 1,443$ -5.2%Public administration 1,332$ 1,319$ -0.9%Wholesale trade 1,301$ 1,308$ 0.5%Manufacturing 1,259$ 1,296$ 2.9%Finance and insurance 1,281$ 1,296$ 1.1%Transportation and warehousing 1,289$ 1,268$ -1.7%Information and cultural industries 1,129$ 1,205$ 6.8%Real estate and rental and leasing 1,181$ 1,129$ -4.4%Educational services 1,029$ 1,086$ 5.5%Administrative and support services 939$ 1,038$ 10.6%Other services 962$ 981$ 2.0%Health care and social assistance 922$ 944$ 2.4%Arts, entertainment and recreation 568$ 618$ 8.9%Retail Trade 609$ 604$ -0.9%Accommodation and food services 432$ 413$ -4.4%

Average'Weekly'Earnings'in'Alberta'by'Industry'(incl.'overtime)

Source:(Statisitcs(Canada,(CANSIM(Table(281;0063


18 CMHC, Housing Now Tables - Calgary CMA, January 2016, p.27.

21 THE ECONOMY

Employment InsuranceThere were 62,480 Albertans receiving regular Employment Insurance (EI) benefits in December 2015, a 2.2 per cent increase (1,370 people) compared to November 2015 and double the 31,220 people receiving benefits in December 2014.

“Job losses have been mounting in Alberta, particularly in the energy sector. And as more workers in the province have been thrown into unemployment, the number of those claiming employment insurance benefits has also ticked higher. [...] The rising number of recipients is not unexpected, and has followed a very similar pattern to the last economic downturn in 2009. In that year, there was also a dramatic spike in the number of workers receiving insurance. It peaked above 71,000 people, well above the levels in December of 2015.” 19

The most significant year-over-year growth in beneficiaries in Alberta occurred among those whose last occupation was in natural and applied sciences (+186 per cent or +4,140), processing, manufacturing and utilities (+180 per cent or +2,480 people) primary industry (+133 per cent or +2,230), business, finance and administrative occupations (+100 per cent or +4,290) and trades, transport and equipment operator occupations (+97 per cent or +12,580).

Despite the jump in the number of regular EI recipients in December 2015, only 2.5 per cent of Alberta’s labour force were collecting benefits, which was below the national average of 2.8 per cent.

Approximately 20,750 Calgarians were receiving regular EI benefits in December 2015, up 2.7 per cent from November 2015 and up 105 per cent compared to a year earlier. The number of EI beneficiaries increased 91 per cent year-over-year in Edmonton to 20,690 in December. This was the fourth consecutive month that the number of EI beneficiaries in Calgary surpassed Edmonton. In the rest of Alberta, the number of beneficiaries was up 105 per cent year-over-year to 21,040.

“[...] the number of employment insurance recipients [in Alberta] will almost certainly continue to rise in 2016 as the job market has weakened even further. In December, the unemployment rate was 7.0 per cent—but that shot up to 7.4 per cent in January [2016]. With more layoffs likely this spring, the number of E.I. recipients will likely crest above the record high set in 2009.” 20

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Aug.08"

Dec.08

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Aug.09"

Dec.09

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19 ATB Financial, The Owl, E.I. claims climb higher, Todd Hirsch, February 18, 2016.

20 Ibid.

22 THE ECONOMY

Office MarketCalgary’s overall downtown office vacancy rate continued to rise in the final quarter of 2015, increasing to 16.4 per cent from 13.9 per cent the previous quarter and from 8.2 per cent in the fourth quarter of 2014. The vacancy rate in Calgary’s Class A downtown office market rose over 12 percentage points year-over-year to 19.8 per cent in the final quarter.

“2015 was a year for the record books. Due to the prolonged downturn in the energy sector and continued uncertainty, companies flooded the downtown market with sublease space leading Calgary into its single largest year of negative absorption ever totalling 2,571,481 square feet. To put it in perspective, the amount of space that came available over the year was equal to one and a half of The Bow Tower. Simply astounding.” 21

Rental rates dropped significantly in the final quarter of 2015, particularly in the sublease sector. Year-over-year, rental rates for Class AA downtown sublease space declined from an average of $37 per square foot (psf) in the fourth quarter of 2014 to $23 psf in the final quarter of 2015, while rates for Class A sublease space dropped from $25 psf to just $8 psf. For Class B and C sublease space in downtown Calgary, rental rates fell from an average of about $14-$15 psf in 2014 to around $2-$5 psf in 2015.22

Looking ahead, with four new office developments to hit the market by 2018 [Oxford’s Eau Claire Tower, Manulife’s 707 Fifth, Brookfield Place - East, and Telus Sky], Cresa projects the office vacancy rate in downtown Calgary to continue to rise, reaching a peak of about 21 per cent in 2018.

“From a real estate perspective there is always a lag in the recovery of office demand behind a rebound in energy prices. Even if we see more sustainable energy prices come the end of the year, it could be another 12-18 months before the office market starts to materially change. Given the amount of inventory that will need to be absorbed to bring the office market into balance, it is challenging to expect material relief in the next two years in the downtown office market.” 23

8.2%%

3.8%%7.6%%

15.6%%12.9%% 13.7%%

16.4%%

8.8%%

19.8%%22.4%%

17.2%% 17.0%%

0.0%%

5.0%%

10.0%%

15.0%%

20.0%%

25.0%%

Overall%Downtown%

AA%Downtow

n%

A%Downtown%

B%Downtown%

C%Downtown%

Beltline%

Vacancy&Ra

te&

Calgary&Downtown&and&Beltline&Office&Vacancy&Rates&

Q4%2014% Q4%2015%

Source: Cresa Point of View, Fourth Quarter 2014 and 2015 Downtown and Beltline Office Market Reports.


21 Cresa, Point of View, Fourth Quarter 2015, Downtown and Beltline Office Market Report, p.1.

22 Ibid.

23 Ibid, p.2.

23 THE ECONOMY

Alberta EconomyThis section on the Alberta Economy includes a discussion of: Economic Growth, Oil Prices, Crude Oil Production, Active Drilling Rigs, Rental Market, Building Permits, Retail Sales, Bankruptcies and Population.

Economic GrowthEnergy companies continued to layoff workers and cut capital spending in the final quarter of 2015, as oil prices fell further to an average of $US37 per barrel in December. In 2015, 116 Alberta employers informed the provincial government of group layoffs. Employers are required to provide the government four weeks’ notice of their intention to layoff 50 or more employees at a single-location within a four-week period. Over 17,500 Albertans were affected by the group layoffs, up substantially from 2014 when the government received 35 notices affecting 7,500 people. Over three-quarters of the group layoffs in 2015 involved terminations in the oil and gas sector and related businesses. Notable announcements of layoffs in the fourth quarter included Enmax, Trans Canada Corp., Enbridge, Athabasca Oil Corp., Finning International, Telus and Atco Group.24

The economic downturn in Alberta is expected to be more protracted than previously forecast, and the Conference Board of Canada now projects real GDP in the province to contract by 1.2 per cent in 2015.25 This is down 0.5 percentage points from the Spring 2015 forecast.

Output in Alberta’s goods-producing industries is forecast to contract 4.0 per cent in 2015, led by declines in the agriculture industry (-11 per cent) and construction industry (-7.8 per cent). Output in the mining and oil and gas industry is projected to fall 1.7 per cent, while manufacturing output is forecast to decline 2.4 per cent.

“The plunge in crude oil prices is also putting a severe damper on Alberta’s red-hot housing market. The oil patch acted as a magnet, pulling in migrants from different parts of the country and from abroad and generating a lot of residential construction activity to accommodate the influx of people. However, with oil firms responding to the drop in crude prices by slamming the brakes on investment and on hiring, net annual inflows of immigrants will drop to an average of around 39,000 over the next two years (down from an average of

!5%$!4%$!3%$!2%$!1%$0%$1%$2%$3%$4%$5%$6%$7%$

2000$

2001$

2002$

2003$

2004$

2005$

2006$

2007$

2008$

2009$

2010$

2011$

2012$

2013$

2014$

2015f$

2016f$

2017f$

2018f$

2019f$

2020f$

%"cha

nge"

Alberta"Economic"Outlook,"Actual"and"Forecasted""%"Change"in"GDP"and"Employment"

GDP$!$Alberta$ Employment$!$Alberta$ GDP$!$Canada$

Source: Conference Board of Canada, E-Data System


24 Job Bank, Job Market Trends and News, Alberta.

25 Conference Board of Canada, Provincial Outlook, Economic Forecast, Autumn 2015.

24 THE ECONOMY

78,000 over the last three years). Slower immigrant inflows, combined with job losses from the oil rout, will stifle demand for new housing.” 26

Output in Alberta’s services-producing industries is projected to advance by a modest 1.4 per cent in 2015, led by 3.9 per cent growth in educational services, 3.3 per cent growth in finance, insurance and real estate and 3.0 per cent growth in health care and social assistance. Output in the transportation and warehousing industry is forecast to decline by 3.1 per cent in 2015.27

The Conference Board of Canada projects positive growth of 1.2 per cent for the Alberta economy in 2016. The goods-producing sector is forecast to expand by 0.6 per cent, led by growth in agriculture (+14.3 per cent). Output in the mining and oil and gas, manufacturing and construction industries is forecast to contract again in 2016. Services-producing industries are projected to advance 1.2 per cent in 2016, led by growth in health care and social assistance, community, business and personal services, and finance, insurance and real estate.

The Alberta government is not as optimistic about the provincial economy in 2016. The government’s third quarter fiscal update forecasts Alberta’s GDP to contract by 1.1 per cent in 2016.28 The last time Alberta experienced two consecutive years of economic decline was in 1982-83.

“The steep decline in oil prices means that the downturn in Alberta’s economy will be deeper and longer than forecast at Budget [2015]. Following an estimated decline in real GDP of 1.5% in 2015, Alberta’s economy is expected to contract again in 2016 by 1.1%. Weaker economic conditions continue to weigh on incomes, including wages and salaries, corporate profits, and Government of Alberta revenue. [...] Though the outlook for 2016 has deteriorated, there are some factors that remain supportive of growth. Oil sands output will continue to expand, driving exports. As costs moderate, a lower Canadian dollar will support non-energy exports and boost revenue. Increased public capital spending will help offset some of the declines in private sector investment.” 29

!6.8%&!1.4%&!0.9%&

0.1%&0.5%&0.5%&1.9%&2.7%&3.2%&3.3%&

14.3%&1.2%&

!12%&!9%& !6%& !3%& 0%& 3%& 6%& 9%& 12%&15%&

Construc7on&Manufacturing&

Mining&Wholesale&&&retail&trade&

Transporta7on&&&warehousing&Public&administra7on&

Finance,&insurance&&&real&estate&Community,&bus.&&&personal&services&

Health&&&social&assistance&U7li7es&

Agriculture&All&industries&

%"change"

Contribu0ons"to"Alberta"Real"GDP"Growth"2015"and"2016"Forecast"

2015f& 2016f&

Source: Conference Board of Canada, Provincial Outlook, Autumn 2015.


26 Conference Board of Canada, Provincial Outlook, Autumn 2015, p.65.

27 Ibid.

28 Government of Alberta, 2015-16 Third Quarter Fiscal Update and Economic Statement, February, 2016,

29 Ibid, p.12.

25 THE ECONOMY

Oil PricesThe price of West Texas Intermediate (WTI) crude oil started the year at an average of US$47 per barrel in January 2015. Prices peaked in June at close to US$60 per barrel, but deteriorated in the second half of 2015, dropping to about US$37 per barrel in December. In the final quarter of 2015, WTI crude prices averaged US$42 per barrel, down from an average of US$46 per barrel the previous quarter. Year-over-year, crude prices were down 42 per cent from an average of US$73 in the fourth quarter of 2014.

Western Canada Select (WCS), the Canadian heavy oil benchmark, averaged US$28 per barrel in the fourth quarter of 2015, down from US$33 per barrel in the third quarter of 2015 and US$59 in the final quarter of 2014.

The price differential between WCS and WTI averaged US$14.49 per barrel in the final quarter of 2015, up from US$13.27 the previous quarter but relatively unchanged year-over-year (US$14.24}.30

A glut of oil is projected to keep crude prices from rebounding in the near term. For 2016, major Canadian banks and the U.S. Energy Information Administration (EIA) estimate the price of WTI will fall within the range of US$37-US$42 per barrel. For 2017, the price of WTI crude is forecast to average US$45-US$59 per barrel.31

“Supply growth continues to outpace demand growth, as both OPEC and non-OPEC producers have remained resilient. A recent agreement between Russia, Saudi Arabia and a couple other OPEC members would potentially freeze production at January levels, if other countries (namely Iran and Iraq) agree to do the same. Even if this agreement were to be implemented, it wouldn’t be a game changer for the oil market. It does show that Saudi Arabia may be willing to take action to balance the market; but the market needs production cuts in order to move back into balance, which this agreement fails

0.00#

20.00#

40.00#

60.00#

80.00#

100.00#

120.00#

Q1#09

#Q2#09

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#Q4#09

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#Q3#11

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#Q3#12

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#Q1#13

#Q2#13

#Q3#13

#Q4#13

#Q1#14

#Q2#14

#Q3#14

#Q4#14

#Q1#15

#Q2#15

#Q3#15

#Q4#15

#

US$/bbl'

Benchmark'Oil'Prices'(US$/Barrel)'and'WCS'Differen<al'Quarterly'Average,'Q1'2009'I'Q4'2015'

WCS#Differen6al# West#Texas#Intermediate#(WTI)#

Western#Canada#Select#(WCS)#

Source: Baytex Energy Corp, Historical Oil Pricing

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30 Baytex Energy Corp., Q4 2015 Heavy Oil Pricing Update – January 5, 2016.

31 Scotia Global Forecast Update (highest value in the range), Feb 1, 2016; US EIA Short Term Energy Outlook, Feb 9, 2016; BMO Commodity Forecast, Feb 23, 2016; TD Commodity Price Report, Feb 19, 2016.

26 THE ECONOMY

to provide. As such, we expect prices to remain around current levels in the very near term before moving into the US$45-55 per barrel range by year-end. This is when output in the U.S. is expected to drop considerably as the lack of investment and drilling over the last year filters through to production numbers. If this decline in production fails to materialize, prices will be hard pressed to rise much above US$40 per barrel.” 32

The Alberta government’s third quarter fiscal update revealed that lower energy royalties and reduced tax revenue are expected to increase the provincial deficit from $6.1 billion to $6.3 billion for the fiscal year ending in March 2016. The province projects investment in the oil and gas sector to decline by a further 20 per cent in 2016, after a steep decline in 2015.

“Oil and gas investment is expected to contract by over 20% in 2016, sharper than the 4.2% decline expected at Budget [2015]. The continued slump in oil prices has caused energy companies to cut spending further. Conventional oil and gas investment has slowed considerably, with the number of rigs drilling falling to multi-decade lows. Spending in the oil sands will be limited to maintenance of existing facilities and the completion of projects that were under construction prior to the price decline. Firms will continue to seek ways of cutting costs by bargaining aggressively with suppliers and containing labour costs. Some consolidation within the industry is likely, as firms with healthy balance sheets acquire those under financial stress.” 33

Crude Oil ProductionCrude oil production in Alberta was up 8.4 per cent year-over-year in the third quarter of 2015 to 43.7 million cubic metres. Production of crude bitumen (oil sands) and synthetic crude oil increased 18 per cent and 8.6 per cent respectively. Light and medium crude oil production fell 13 per cent year-over-year while heavy crude production declined 10 per cent.34

Year-to-date November 2015, crude oil production in Alberta reached 153.2 million cubic metres, a 5.2 per cent increase compared to the first eleven months of 2014. Production of crude bitumen was the main driver of growth, increasing 14.7 per cent year-over-year.

!5000$

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32 TD Economics, Commodity Price Report, Feb 19, 2016.

33 Government of Alberta, 2015-16 Third Quarter Fiscal Update and Economic Statement, February 2016, p.13.

34 Statistics Canada, CANSIM table 126-0001.

27 THE ECONOMY

Energy companies in western Canada will continue to boost production over the next five years. Western Canadian crude oil production is forecast to increase from 3.68 million barrels per day (b/d) in 2015 to 3.83 million b/d in 2016, according to the latest forecast from the Canadian Association of Petroleum Producers (CAPP).35

Active Drilling RigsThere was an average of 168 active drilling rigs in western Canada during the final quarter of 2015, down 56 per cent from an average of 384 active rigs in the fourth quarter of 2014. In 2015, the number of active drilling rigs in western Canada declined to an average of 184, from 370 in 2014, representing a 50 per cent decline. Rig utilization dropped to 24 per cent in 2015, from 46 per cent in 2014.36 The Canadian Association of Oilwell Drilling Contractors (CAODC) projects the number of active drilling rigs in western Canada to decline to an average of 159 in 2016, while rig utilization is forecast to fall to 22 per cent.37

“Clearly, the 2016 outlook— for our members and the entire oil and gas industry— is challenging. Amid consolidations, insolvencies, and thousands of layoffs, oil and gas services companies will continue to struggle to provide jobs for Canadians, and tax revenues and royalties for governments in a rapidly changing global marketplace. CAODC members in particular are looking at some of the lowest operating days and utilization rates in our 65 year history.” 38

Rental MarketAlberta’s apartment vacancy rate rose to 5.6 per cent in October 2015, from 2.1 per cent in October 2014. Reduced income growth and job prospects have contributed to lower demand for rental housing in the province.

496$

152$

338$ 370$

521$

198$

377$ 384$

291$

95$

182$ 168$ 186$

88$157$

204$

0$

100$

200$

300$

400$

500$

600$

Q1$2013$

Q2$2013$

Q3$2013$

Q4$2013$

Q1$2014$

Q2$2014$

Q3$2014$

Q4$2014$

Q1$2015$

Q2$2015$

Q3$2015$

Q4$2015$

Q1$2016f$

Q2$2016f$

Q3$2016f$

Q4$2016f$

Actual'and'Forecasted'Ac/ve'Drilling'Rigs''Western'Canada'7'Quarterly'Averages'

Source: Canadian Association of Oilwell Drilling Contractors


35 Canadian Association of Petroleum Producers, Crude Oil Forecast, Transportation and Marketing, June 2015,

36 CAODC, Rig Counts - By Quarter, http://www.caodc.ca/rig-counts-drilling-dr-quarter

37 CAODC State of the Industry, 2015 Review & 2016 Forecast, November 2015.

38 Ibid, p.10.

28 THE ECONOMY

http://www.caodc.ca/rig-counts-drilling-dr-quarter

http://www.caodc.ca/rig-counts-drilling-dr-quarter

Among Alberta’s largest urban centres, Edmonton (4.2 per cent) and Medicine Hat (4.6 per cent) had the lowest vacancy rates in October 2015. Wood Buffalo posted the highest vacancy rate at almost 30 per cent, up significantly from 11.8 per cent in October 2014.

“Both Cold Lake and Wood Buffalo Census Agglomerations (CAs) are heavily influenced by energy sector activity. Both CAs are situated in the oil-sands region of Alberta where large industrial projects relating to oil extraction are the major drivers of the local economy. Weaker employment prospects in these areas have had a significant effect on the vacancy rate.” 39

The average rental price for a two-bedroom apartment in Alberta rose to $1,253 per month in October 2015, from $1,238 per cent one year prior. Among the province’s largest urban centres, Wood Buffalo had the highest average rent for a two-bedroom apartment at $1,841 per month, but this was down significantly from $2,118 per month in October 2014. Medicine Hat ($828 per month) and Lethbridge ($919 per month) had the lowest average rent for a two-bedroom apartment in October 2015.

Building PermitsAlberta contractors took out $4.30 billion in building permits during the final quarter of 2015, down 7.0 per cent year-over-year. Total residential permits declined to $2.55 billion, down 7.5 per cent from the fourth quarter of 2014.

4.2%%4.6%%5.3%%5.4%%6.1%%

10.4%%29.4%%

5.6%%

0.0%% 5.0%% 10.0%% 15.0%% 20.0%% 25.0%% 30.0%% 35.0%%

Edmonton%Medicine%Hat%

Calgary%Red%Deer%

Lethbridge%Grande%Prairie%Wood%Buffalo%

Alberta%

Vacancy&Rate&

Private&Apartment&Vacancy&Rates&in&Alberta's&Largest&Urban&Centres,&October&2014&and&2015&

OctJ15%

OctJ14%


!$828!!

!$919!!

!$1,036!!

!$1,193!!

!$1,259!!

!$1,332!!

!$1,841!!

!$1,253!!

!$-!!!! !$500!! !$1,000!! !$1,500!! !$2,000!! !$2,500!!

Medicine!Hat!

Lethbridge!

Red!Deer!

Grande!Prairie!

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Calgary!

Wood!Buffalo!

Alberta!

Private(Apartment(Average(Rents((22bedroom)(in(Alberta's(Largest(Urban(Centres,(Oct.(2014(and(2015(

Oct-15!

Oct-14!



39 Canada Mortgage and Housing Corporation, Rental Market Report, Alberta Highlights, Fall 2015, p.3.

29 THE ECONOMY

Non-residential permits fell to $1.87 billion, down 6.3 per cent from a year earlier. Residential permits accounted for 60 per cent of the total value of permits issued during the fourth quarter of 2015.

“[...] builders’ intentions are slowing. Total residential and non-residential permits slumped to $953 million in November 2015 (seasonally adjusted). That’s the lowest monthly level since April 2011. The trend toward lower building permits will almost certainly continue in 2016, particularly as commercial office projects in Edmonton and Calgary are completed and add to the glut of office space.40

A jump in permits in October 2015 was the result of a change in provincial codes that took effect November 1, 2015, with contractors rushing to get permits in advance of that change.41 In October, Alberta builders took out $1.31 billion in residential permits, up 36 per cent from the previous year.

Retail SalesRetail sales in Alberta totaled $6.12 billion in December 2015, down 3.1 per cent compared to the previous month and down 5.5 per cent year-over-year.

“[...] the fact that sales have slowed significantly should not come as a surprise. Given the number of layoffs that have troubled our economy, it’s maybe surprising that sales hadn’t fallen faster, sooner.” 42

Retail sales were down in most of the major spending categories year-over-year in December 2015. Gasoline sales accounted for much of the decline (-14.6 per cent), along with electronics and appliances (-13.6 per cent), though miscellaneous stores sales (-10.3

0"

500"

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Jan)12"

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4"

4.5"

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40 ATB Financial, Alberta Economic Outlook Q1 2016, January 2016, p.4.

41 Ibid.

42 ATB Financial, The Owl, Alberta retailers feel the holiday blues, Nick Ford, February 19, 2016.

30 THE ECONOMY

per cent) and motor vehicles and parts (-8.3 per cent) were also down significantly. Health and personal care stores (+3.5 per cent) and sporting goods, hobby, book & music retailers (+2.0 per cent) were the only two categories to record year-over-year growth in December 2015.

Retail sales in Alberta fell by an estimated 3.0 per cent in 2015, following robust growth of 7.5 per cent the previous year. Retail sales also contracted in Saskatchewan and Nova Scotia in 2015.

“After leading the nation in year over year retail sales growth over the 2011-2014 period, Alberta and Saskatchewan are both expected to see negative growth for 2015, finishing 9th and 10th [out of 10] in Colliers’ Provincial projections, respectively - a complete reversal of 2010 to 2014 retail growth rankings. [...] Alberta and Saskatchewan’s move to the bottom of the rankings coincides with the WTI plunge, which in turn yielded negative impacts on production, employment, and ultimately consumer confidence and retail spending.” 43

For 2016, forecasts for growth in Alberta retail sales are weak, ranging from a slight contraction of -0.2 per cent (TD Economics)44 to growth of 2.5 per cent (Conference Board of Canada)45.

“Retail sales, which advanced at an average annual pace of 6.8 per cent over the last half decade, declined by about 2.9 per cent last year, and the recovery will be anemic over the next two years, as job prospects are not what they were. Oil and gas companies are reducing their capital plans and renegotiating labour and supply contracts. Layoffs in the oil patch have become a common feature in the nightly newscasts, while paycheques have been slashed as loweroil prices hit the bottom lines of energy firms.” 46

TD Economics forecasts national retail sales to expand by 3.3 per cent in 2016, led by growth in British Columbia (+6.2 per cent) and Ontario (+5.1 per cent).47


43 Colliers International, National Retail Report Canada, Fall 2015 Edition, p.5.

44 TD Economics, Provincial Economic Forecast, January 26, 2015, p.7.

45 Conference Board of Canada, Provincial Outlook, Autumn 2015, p.68.

46 Ibid, p.65.


31 THE ECONOMY

BankruptciesIn the third quarter of 2015, 1,067 Albertans filed for personal bankruptcy, down 3.0 per cent from the previous quarter but up 19 per cent from 898 bankruptcies in the third quarter of 2014. While personal bankruptcies have increased year-over-year, they are nowhere near the peak reached in the third quarter of 2009 (2,917). According to ATB Financial’s Todd Hirsch, there are three main factors keeping personal bankruptcies well-contained: households with two income earners, severance packages and low interest rates.

“For all of these reasons, we have yet to see consumer bankruptcies in Alberta rise anywhere close to 2009 levels. But no one should be too complacent about this. Rather than preventing bankruptcies, these factors are probably just delaying them. Generous severance packages and low interest rates can carry you for a while, but unless there’s a major rebound in Alberta’s economy very soon (and that’s unlikely), we can anticipate bankruptcy rates to steadily rise in 2016.” 48

Eighteen businesses filed for bankruptcy in Alberta in the third quarter of 2015, down from 34 businesses the previous quarter and down from 23 businesses year-over-year.49

PopulationFor the nineteenth consecutive quarter, Alberta recorded the highest quarterly population growth rate in Canada in the third quarter of 2015, though the margin was slim. The province’s population grew by 20,418 or 0.49 per cent to an estimated 4,216,875 as of October 1, 2015. Saskatchewan had the next highest population growth rate in the third quarter at 0.46 per cent, followed by British Columbia (+0.44 per cent), Ontario (+0.42 per cent) and Manitoba (+0.40 per cent). Canada’s population increased by 134,000 or 0.37 per cent to an estimated 35.99 million.50

Alberta gained about 10,000 net international migrants from July to September 2015, up slightly from 8,850 in the third quarter of 2014. A record 14,000 immigrants to the province was partially offset by net outflows of non-permanent residents (NPR).

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Personal'and'Business'Bankruptcies'in'Alberta'Personal" Business"

Source: Office of the Superintendent of Bankruptcy Canada.


48 Globe and Mail, Why Alberta’s personal bankruptcies are not drastically rising, Todd Hirsch, December 4, 2015.

49 Office of the Superintendent of Bankruptcy Canada, Insolvency Statistics in Canada - Third Quarter of2015.

50 Statistics Canada, Catalogue no. 91-002-XWE, Quarterly Demographic Estimates, July to September 2015, December 16, 2015.

32 THE ECONOMY

“Since temporary work permits usually expire at the end of the calendar year, net outflows of NPRs are common in the last quarter of the year. Changes to policies related to the Temporary Foreign Worker (TFW) program have led to more sustained outflows than usual across the country over the past year. Alberta has been particularly affected because very large inflows over many years have resulted in large numbers of NPRs in the province; over 96,000 as of October 1, 2015, down from about 120,000 a year ago. Although the NPR category includes students and refugee claimants, the vast majority in Alberta are workers. The combination of policy changes, the economic downturn and a large number of TFWs in the province are the likely reasons behind the sustained net outflows of NPRs from Alberta.” 51

With 15,128 births and 5,942 deaths, natural increase in Alberta totaled 9,186 in the third quarter of 2015, accounting for 45 per cent of the province’s population increase. In addition, Alberta led all provinces with a natural growth rate of 0.22 per cent.

Net interprovincial migration totaled 1,234 in the third quarter of 2015, almost seven times lower than the same quarter in 2014 (6,320). The largest net inflows to Alberta arrived from Quebec (+1,204) and Ontario (+1,014), while the province lost a net 2,316 people to British Columbia - the sixth straight quarterly loss.

“This is the first time in 20 quarters that Alberta has not led the country in interprovincial migration gains. British Columbia (6,315) far outstripped all other jurisdictions this quarter. Alberta and Ontario (1,207) were the only other regions with net gains.” 52

For the twelfth consecutive quarter, Alberta posted the highest annual population growth rate among provinces in the third quarter of 2015 at 1.68 per cent (+69,800). The national growth rate was 0.85 per cent. Still, this was the lowest third quarter year-over-year growth for Alberta since 2010.

!10,000%

0%

10,000%

20,000%

30,000%

40,000%

Q1%20

08%

Q3%20

08%

Q1%20

09%

Q3%20

09%

Q1%20

10%

Q3%20

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Q3%20

11%

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Person

s'

Components'of'Alberta's'Popula3on'Growth'

Natural%Increase% Net%Interprovincial%Migra>on% Net%Interna>onal%Migra>on%

Source: Statistics Canada, CANSIM Table 276-0041.


51 Alberta Treasury Board and Finance, Quarterly Population Report, Third Quarter 2015.

52 Ibid.

33 THE ECONOMY

Canadian EconomyThis section on the Canadian Economy includes a discussion of: Economic Growth, Investment, Consumer Spending, Housing, Trade, and Fiscal Policy.

Economic GrowthThe Canadian economy expanded by an estimated 0.3 per cent in November 2015, coming back to life after two months of negative or minimal growth. However, even with the solid monthly gain, real GDP was up just 0.2 per cent from one year prior. Further, due to the slow start, annualized economic growth in the fourth quarter was tracking at less than 0.3 per cent.53

Growth in the goods-producing industries was led by oil and gas extraction, which was up for the second straight month in November 2015 (+0.6 per cent) due primarily to a recovery in production at Syncrude. The drop in oil prices has hurt producers and weighed on investment and employment, but the decline curves in Canada are generally not as steep as those in the U.S. shale industry. Canadian oil production is expected to continue to rise modestly through 2018 before flattening in 2019.

“…While conventional [oil] production is likely to decline next year, output from the oilsands is expected to grow. In fact, the projects that were supposed to come online through 2017 are likely to go ahead, as much of the investment took place before oil prices began to plunge last year. It has largely been the projects that were in the earlier stages of development that have been impacted.” 54

A lengthy spell of low commodity prices limited growth in the Canadian economy in 2015. However, it is important to realize that low commodity prices do not necessarily guarantee low Canadian growth rates. Note that the 1990s represented an extended period of low and declining commodity prices, culminating in $10 oil late in the decade. Yet, the Canadian economy managed to record two consecutive years of 5.0+ per cent growth in 1999 and 2000 – the best two-year performance in 40 years.55 Further, the commodity-producing Australian economy posted some of the strongest job growth among advanced economies in 2015 – even better than the robust U.S. performance.

Nonetheless, Canada’s oil and gas sector has contracted by 6.4 per cent over the past year, or a trend of about 0.5 per cent per month. Further price declines in early 2016 will undoubtedly act to restrain any consistent growth in the sector.


53 TD Economics, Data Release: The Canadian economy shows a little life in November, but the quarter likely to be weak, January 29, 2016.

54 TD Economics, As Oil Prices Scrape the Bottom of the Barrel, What Lies Ahead?, December 15, 2015.

55 BMO Economics, Canadian 2016 Outlook: Second Wind or Second Shoe?, December 11, 2015.

34 THE ECONOMY

As of November 2015, output was also down year-over-year across most other goods-producing industries, including manufacturing (-1.1 per cent), construction (-3.6 per cent, related to the drop in resource sector investment) and utilities (-2.8 per cent).56

The service sector has driven most of the growth in the Canadian economy over the past 12 months (+1.4 per cent). Unfortunately, the leading industries in this sector have been retail trade and real estate, which are reliant on consumer spending – a dependence that most forecasters do not believe will be sustainable due to rising debt levels.

Following a modest recovery through the summer months, the Canadian economy slowed again and grew by an estimated 1.2 per cent overall in 2015 – the weakest increase since 2009. Looking ahead, forecasters expect growth to come in below 2.0 per cent through 2017 – consistently below U.S. growth.

“Although much of the recent weakness has been contained to the energy sector, it is beginning to spread to other areas of the economy. The consumer— the main driver of the economy over the last several years—is overstretched, and consumer spending is beginning to show signs of weakening. Meanwhile, the acceleration in exports that was expected for 2016 has so far shown few signs of materializing despite a substantial pickup in the U.S. economy and a large depreciation in the Canadian dollar. The manufacturing sector – another area that should have seen a substantial boost from the decline in the Canadian dollar – saw its output decline through the first 10 months of 2015.” 57

InvestmentReal capital expenditure contracted by an estimated 7.0 per cent in 2015, which alone subtracted nearly a full percentage point from annual GDP growth.58 The slide in commodity prices in early 2016 pointed to further cuts in the resource sector, with oil firms expected to reduce spending by another 16 per cent in 2016 following a 24 per cent reduction in 2015. However, the dismal investment environment is not limited to the energy sector, with total investment not expected to bottom-out until at least mid-2016.59

!1#

0#

1#

2#

3#

4#

2015#Q1#

2015#Q2#

2015#Q3#

2015#Q4#

2016#Q1#

2016#Q2#

2016#Q3#

2016#Q4#

2017#Q1#

2017#Q2#

2017#Q3#

2017#Q4#

Percen

tage)Growth)

Actual)and)Forecasted)Annualized)Real)GDP)Growth,)Q1)2015)to)Q4)2017,)Canada)and)U.S.))

Canada# U.S.#

Source: TD Economics, Quarterly Economic Report, December 17, 2015.


56 BMO Economics, GDP: “Please Sir, I Want Some More”, January 29, 2016.

57 Conference Board of Canada, Canadian Outlook – Winter 2016, February 2016.

58 BMO Economics, Canadian 2016 Outlook: Second Wind or Second Shoe?, December 11, 2015.

59 CIBC Economics, Forecast, December 17, 2015.

35 THE ECONOMY

“Non-energy mining investment is dealing with raw material prices that have been falling since 2013. Building construction is expected to decline this year due to sluggish demand, modest employment growth, and rising vacancy rates. At the same time, machinery and equipment spending has been hampered by weak business confidence, sluggish global growth, and a disappointing domestic economy.” 60

According to the Bank of Canada’s most recent Business Outlook Survey, the fourth quarter of 2015 saw a further deterioration in business confidence, with the Bank noting that, “the adverse effects of the (oil price) shock are increasingly being felt across most regions and sectors.”61 The survey suggested a significant decline in future investment plans; and hiring intentions fell to their lowest level since 2009. The only good news from the survey was evidence that exporters not directly affected by lower commodity prices were benefitting from strengthening U.S. demand and the weak Canadian dollar.

Market speculation for another interest rate cut heightened following the release of the Bank’s report. However, the Bank already made two rate cuts during 2015 in an attempt to facilitate investment, and forecasters generally expect the overnight rate to remain at its current 0.5 per cent target until 2017.

Consumer SpendingThe Canadian consumer continued to drive economic growth in the fourth quarter of 2015. Retail sales posted a strong monthly increase in November (+1.7 per cent), with another great month for autos (+3.5 per cent) leading the way. Other categories recording a monthly jump included sporting goods (+3.0 per cent), electronics and appliances (+2.1 per cent), and clothing (+2.2 per cent), with “Black Friday” sales providing a boost.62 Sales were higher across all major retail categories in November except gasoline stations (-0.6 per cent), and this was due to lower prices. For the fourth quarter as a whole, retail sales were tracking at 4.6 per cent growth (annualized).

In addition to an earlier start to the holiday season, consumer expenditure was also buoyed by the depreciated Canadian dollar, which has helped to keep more spending within Canada.

8.2%% 8.5%% 8.0%%

15.4%%

*16.2%%*21.3%%

*9.7%%*13.3%%

*30%%

*20%%

*10%%

0%%

10%%

20%%

Total%trips% Same*day%trips% Overnight%trips% Exchange%

Percentage)Change)in)Cross/Border)Trips)Canada)and)U.S,)2015)

American%trips%to%Canada% Canadian%trips%to%US%

Source: TD Economics, Canada-U.S. Cross-Border Spending: A Reversal of Fortunes, February 8, 2016.



61 TD Economics, Data Release: Canadian business sentiment deteriorated in Q4, as weakness spreads beyond resource sector, January 11, 2016.

62 BMO Economics, Black Friday North Helps Retailers, January 22, 2016.

36 THE ECONOMY

“In November alone, 775 thousand fewer Canadians visited the United States compared to year-ago levels – 70% of those being daily visits that are associated with shopping. At the same time, an additional 130 thousand Americans took the trip up north – a particular benefit for retailers closest to the border.” 63

With the loonie expected to average about 71 U.S. cents in 2016 – 7 cents lower than in 2015 – Canadian visits to the U.S. are expected to fall to their lowest level since the Great Recession.64 As a result, Canadian spending in the U.S. is expected to shrink to around $20.5 billion in 2016. Similarly, American visits to Canada picked up in 2015, with momentum likely to carry over in 2016. American consumer spending in Canada is forecast to rise to $9.6 billion in 2016, the highest level in over a decade. While Canadian visits to the U.S. will continue to outnumber American visits north, the change in cross-border shopping trends is expected to provide a direct boost to Canada at $4-5 billion over the 2015-16 period.

Looking ahead, growth in consumer spending is expected to decelerate somewhat in 2016. Modest employment gains, high debt burdens and rising imported good prices should limit spending growth to below 2.0 per cent in 2016, with only a slight acceleration anticipated in 2017.

“With disposable income and job growth expected to slow, consumers will be hard pressed to increase their current pace of spending. Household debt as a share of income is at a record high, and this will contain growth in household spending to that of disposable income.” 65

HousingCanadian housing starts fell sharply in December 2015 to 173,000 units (annualized) from 212,000 units in November.66 The decline was driven almost entirely by fewer urban condo starts, which were down 27 per cent on the month – the steepest drop since 2009. However, forecasters noted that housing starts are typically volatile during the winter months, even on a seasonally adjusted basis.

$0.3%

$0.5%

$0.7%

$0.9%

$1.1%

$10%

$12%

$14%

$16%

$18%

$20%

$22%

$24%

2000%

2001%

2002%

2003%

2004%

2005%

2006%

2007%

2008%

2009%

2010%

2011%

2012%

2013%

2014%

2015%

2016F%

CAD/

USD

'

Spen

ding'(B

illions'of'C

AD)'

Annual'Spending'by'Canadians'in'the'U.S,'CAD/USD'Exchange'Rate,'Actual'and'Forecast'

Canadian%Spending%in%US% CAD/USD%

Source: TD Economics, Canada-U.S. Cross-Border Spending: A Reversal of Fortunes, February 8, 2016.


63 TD Economics, Data Release: Canadian retail sales fly past expectations, rise robustly in November, January 22, 2016.

64 TD Economics, Canada-U.S. Cross-Border Spending: A Reversal of Fortunes, February 8, 2016.


66 BMO Economics, Housing Starts Fall Back to Earth, January 11, 2016.

37 THE ECONOMY

“With the drop in starts in December, the level of new home construction moved from a too-hot for comfort pace, to one more in line with underlying economic and demographic fundamentals. However, given changing weather patterns and the rising importance of the more volatile multi-unit component, one should not read too much into month-to-month swings in the data.” 67

Overall, housing starts totaled about 194,000 in 2015 – slightly higher than the 188,000 and 189,000 tallies recorded in 2013 and 2014 respectively.68 Looking ahead, forecasters are not optimistic that housing will continue to make significant contributions to growth, even if lending rates remain low. Starts are expected to trend lower in 2016, closer to the 180,000 total associated with demographics-fueled demand.69 In 2017, anticipated interest rate hikes will further weigh on demand for new homes.

“…The combination of weak economic conditions and overbuilding over the last few years has led to soft housing market conditions with the majority of markets across Canada are either fairly balanced or tipping into buyer's territory. This should keep a lid on new home construction for the next few years.” 70

Existing home sales slipped slightly in December 2015, but were still up about 10 per cent relative to December 2014, and hit a record high in the fourth quarter overall.71 Average existing home prices were up 12 per cent year-over-year in December 2015, but by a more moderate 5.4 per cent excluding the hot markets of Toronto and Vancouver. Indeed, Canada’s housing market is very much a regional story, with sales and price growth expected to continue in Toronto and Vancouver, and further slowing in demand anticipated across the oil-producing provinces.

In December, the government announced changes to qualifying rules for insured mortgages, increasing the required down payment for homes valued at $500,000 or more. As of February 15, borrowers will have to put down 5.0 per cent on the first $500,000 and 10 per cent (formerly 5.0 per cent) on the value of the home in excess.72 Forecasters expect the impact of the regulation change on home sales to be relatively modest, as just 6.4 per cent of insured borrowers were issued a loan of more than $600,000 as of September 2015. Further, buyers with larger down payments, notably foreign investors, have driven the markets of Toronto and Vancouver.


67 TD Economics, Data Release: Canadian new home construction ends 2015 with a whimper, January 11, 2016.

68 BMO Economics, Housing Starts Fall Back to Earth, January 11, 2016.

69 Scotia Economics, Canadian Housing Starts Posted Solid 2015, January 11, 2016.

70 TD Economics, Data Release: Canadian new home construction ends 2015 with a whimper, January 11, 2016.

71 BMO Economics, A Remarkable Year, January 15, 2016.

72 TD Economics, Data Release: Tighter mortgage regulation unlikely to be a game changer, December 11, 2016.

38 THE ECONOMY

Regardless of the effectiveness of the change in mortgage policy, rising borrowing costs and cooling demand is expected to push national average existing home price growth to a more modest trend rate of about 2.0 per cent in 2016 and 2017.

TradeIn December 2015, Canada’s trade deficit narrowed considerably to $585 million from its prior reading of $1.6 billion.73 The improvement was driven by a 3.2 per cent increase in the volume of exports (year-over-year) coupled with a smaller 1.6 per cent increase in imports.

Somewhat counterintuitively, lower oil prices have actually helped to drive real export growth in the Canadian economy. This is because trade is factored into GDP calculations based on volumes, rather than prices. As the price of oil has fallen, Canada has continued to export slightly higher volumes.74

Net trade was a solid contributor to growth in the fourth quarter of 2015, but not for the best of reasons. Compared to the third quarter, exports declined by 0.8 per cent while imports fell by a huge 10 per cent.75 The dramatic decline in imports largely reflects the slide in business investment along with the depreciated Canadian dollar (which makes imports more expensive).

While the weak loonie is certainly a positive for Canada’s export sector, the response thus far has been slower than normal, suggesting that exports are more sensitive to foreign demand than they are exchange rate movements.76

“Although exports are expected to be a key driver of growth, the pace of their expansion is likely to be less than what the level of the loonie and U.S. demand might imply. There are two main reasons for this … First, other nations have also seen their currencies fall against the greenback, and so have similarly gained competitiveness in the U.S. market. Secondly, exports have become less responsive to the exchange rate, and more sensitive to foreign demand. These factors will serve to restrain export growth relative to past cycles.” 77

0.65%

0.70%

0.75%

0.80%

0.85%

(2%

0%

2%

4%

6%

8%

10%

2015%Q1%

2015%Q2%

2015%Q3%

2015%Q4%

2016%Q1%

2016%Q2%

2016%Q3%

2016%Q4%

2017%Q1%

2017%Q2%

2017%Q3%

2017%Q4%

CAD/

US'

Annu

alized

'%'Cha

nge'

Actual'and'Forecasted'Canadian'Export'Growth,'U.S.'DomesAc'Demand'and'CAD/US'Exchange'

Exports% U.S.%Domes:c%Demand% CAD/US%

Source: TD Economics, Quarterly Economic Report, December 17, 2015.


73 TD Economics, Data Release: Canadian trade deficit narrows in December, February 5, 2016.

74 Scotia Economics, Q4 Trade Looking Good In Canada On Big Import Drop, February 5, 2016.

75 Ibid.

76 TD Economics, Data Release: Canada’s trade deficit narrowed in November, January 6, 2016.

77 TD Economics, Quarterly Economic Forecast, December 17, 2015.

39 THE ECONOMY

In spite of the mixed performance of late, Canada’s trade sector is expected to be one of the few solid contributors to growth in 2016. While total exports are forecast to increase by just 2.5 per cent in 2016, anticipated import growth is a much lower 0.8 per cent.78 Export growth should pick up in 2017 to an estimated 3.7 per cent, but rebounding domestic demand will also push import growth to an estimated 2.8 per cent, narrowing the gap and limiting trade’s contribution to GDP.

Fiscal PolicyForecasters estimate that, if implemented, the recently elected Liberal government’s fiscal platform could boost real GDP growth by as much as 0.1 and 0.3 percentage points in 2016 and 2017 respectively.79 The federal government is expected to pump around $10 billion into the economy in each of the next two fiscal years through a combination of changes to income tax brackets, infrastructure funding, the Canada child tax benefit, enhanced employment insurance program, and other forms of spending.80 Higher expenditures should result in the federal government posting at least four consecutive years of deficits, not reaching a surplus position again until 2019-20.

Unfortunately, even with the planned stimulus at the federal level, real government spending is unlikely to make a large contribution to growth in 2016. Most provincial governments have aimed to tighten their budgets, which will offset the additional spending from Ottawa.

“The Liberal plan [increases spending], but it’s hardly enough to get momentum going in the Canadian economy in 2016. In fact, given the direction that provincial budgets are going, the degree of stimulus will be miles from what we saw in the Great Recession.” 81



79 TD Economics, Data Release: Bank of Canada holds policy rate unchanged in face of weaker growth outlook, January 20, 2016.



40 THE ECONOMY

Global/U.S. EconomyThis section on the Global/U.S. Economy includes a discussion of: Global Economic Growth, Advanced Economies, Emerging Economies, U.S. Economic Growth, Consumer Spending, Investment, Trade, and the Labour Market.

Global Economic GrowthDespite receiving support from low energy prices and still-accommodative lending conditions throughout many of the world’s economies, global growth again fell short of expectations in 2015, decelerating to 2.4 per cent from 2.6 per cent in 2014.82 The disappointing result was mainly a reflection of slowing growth across key emerging economies, low commodity prices impacting revenues for exporters, diminished capital flows, subdued trade, and bouts of financial market volatility. Relative to historical growth trends, global economic activity has consistently underperformed over the past few years.

“…Many emerging markets dealt with tumbling currencies and the slowdown in Chinese economic growth. At the same time, Europe and Japan experienced anemic growth. The global economy has now recorded subpar economic growth for four straight years, with all the world’s major regions expanding at a pace well below potential.” 83

One of the major factors influencing the global outlook has been a protracted decline in the price of oil (as well as other commodities, particularly metals). Following a 44 per cent drop in the price of West Texas Intermediate (WTI) crude in 2014, prices fell another 29 per cent through 2015.84 Further, price declines were particularly acute during the fourth quarter of 2015, falling from about US$50 in early September to US$35 by late December. Generally, the low oil price is a reflection of sustained output by Organization of the Petroleum Exporting Countries (OPEC) members amid continued global oil production in excess of consumption.85 Relatively weak growth reports from major emerging markets, particularly China, have also led to expectations of reduced global demand for energy.

Lower oil prices strain the fiscal positions of exporters (such as Canada) and weigh on growth prospects. Further, the outlook for heavily leveraged and already-fragile oil producers is threatened – especially if lending conditions tighten. However, lower oil prices also support global demand by reducing business energy costs and increasing real household income. On a net global basis, most forecasters anticipated this positive impact to dominate in 2015, but a number of factors have acted to dampen the support that lower oil prices would typically provide.


82 World Bank, Global Economic Perspectives, January 2016.

83 Conference Board of Canada, World Outlook, January 2016.

84 Forbes, Saudi Arabia, Shale & Iran: Everything You Need To Know About The Oil Crisis, January 26, 2016.

85 IMF, World Economic Outlook – Update, January 19, 2016.

41 THE ECONOMY

“First and foremost, financial strains in many oil exporters reduce their ability to smooth the shock, entailing a sizable reduction in their domestic demand. The oil price decline has had a notable impact on investment in oil and gas extraction, also subtracting from global aggregate demand. Finally, the pickup in consumption in oil importers has so far been somewhat weaker than evidence from past episodes of oil price declines would have suggested, possibly reflecting continued deleveraging in some of these economies. Limited pass-through of price declines to consumers may also have been a factor in several emerging market and developing economies.” 86

Oil prices, which as of early 2016 were below breakeven levels in North America, are expected to rebound gradually in 2016 and 2017 as demand catches up with supply. Sharp cuts to U.S. oil production should support price growth; but higher exports from Iran following the lifting of sanctions will slow progress. In the absence of significant production cuts on part of OPEC, forecasters do not generally expect the WTI price to surpass the US$50 level until at least mid-2017.

“…The oil market remains oversupplied, with global production continuing to increase, inventories at record levels, and potentially more supply coming on stream. Meaningful production cuts have yet to be implemented, but will likely be needed to promote a quicker and sustained rebalancing of markets and a revival in prices.” 87

Moving forward, forecasters anticipate that global economic growth will edge up in 2016 to about 2.9 per cent in 2016 and 3.1 per cent in 2017-18.88 However, this pickup is predicated on continued progress in advanced economies, a stabilization of commodity prices, and the gradual and successful rebalancing of the Chinese economy.

20#

30#

40#

50#

60#

92#

93#

94#

95#

96#

97#

98#

Q1#20

15#

Q2#20

15#

Q3#20

15#

Q4#20

15#

Q1#20

16#

Q2#20

16#

Q3#20

16#

Q4#20

16#

Q1#20

17#

Q2#20

17#

Q3#20

17#

Q4#20

17#

Price&(US$/bbl)&

Millions&of&B

arrels&Per&Day&

Actual&and&Forecasted&Average&Global&Oil&ProducAon&and&Demand,&WTI&Price,&Q1&2015&to&Q4&2017&

Global#Oil#Produc9on# Global#Oil#Demand# WTI#Price#

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 12, 2016.



87 Scotia Economics, Global Forecast Update, January 5, 2016.


42 THE ECONOMY

Forecast risks remain tilted to the downside and pose the risk of derailing global growth. One major threat is a sharper-than-expected slowdown in China, which has the potential to generate negative spillovers through global trade, commodity price, confidence, currency, and financial channels. Other downside risks include higher interest rates in the U.S. spurring capital outflow and currency depreciation in emerging economies; high and rising debt burdens in both advanced and emerging economies acting to limit the ability of governments to implement fiscal stimulus; and escalating geopolitical tensions.

Advanced EconomiesThe U.S. and U.K. led advanced economies in 2015 with real GDP growth rates of 2.5 and 2.2 per cent respectively.89 The euro area recorded modest overall growth with highly divergent performances among its members; while Japan and Canada lagged behind other advanced economies. The majority of advanced economies are expected to post slightly higher growth into 2016 and 2017, with aggregate real GDP increasing to 2.1 per cent from 1.6 per cent in 2015. However, the general ranking of advanced economies is not expected to change, with the U.S. and U.K. continuing to lead, and Japan and Canada posting lackluster growth through the near-term horizon.

The slowdown across many major emerging markets, an additional bailout for Greece following its election, the ongoing Russia-Ukraine conflict, and the large influx of migrants from the Middle East played a role in limiting growth in the euro area.90 Member performances varied substantially, as Spain recorded above-average real GDP of close to 3.0 per cent while Italy languished at around 1.0 per cent growth.

There were some positive developments during 2015 such as the euro area unemployment rate reaching its lowest level since January 2012.91 However, investment remains depressed in the region, which prompted the European Commission (EC) to introduce a plan that will spend €300 billion from 2015 to 2017 in an attempt to revitalize business spending. The plan aims to boost competitiveness, strengthen human capital, and improve infrastructure and productivity by targeting key sectors such as education, research and innovation. The EC estimates that the plan could generate as many as 1.3 million jobs by 2017.

0" 1" 2" 3" 4" 5" 6" 7" 8"

India"China"

Canada"U.S."

Euro"Area"Developing"Advanced"

World"

Annual&Real&GDP&Growth&(%)&

Actual&and&Forecasted&Real&GDP&Growth&Rates,&Selected&Economies,&2014&to&2017&

2014" 2015" 2016" 2017"

Source: World Bank, Global Economic Perspectives, January 2016.


89 Scotia Economics, Global Forecast Update, January 5, 2016.


91 Conference Board Economics Watch, European View, December 18, 2015.

43 THE ECONOMY

The recently implemented investment plan along with a commitment by the European Central Bank (ECB) to maintain and extend its quantitative easing program, low oil prices and a depreciated euro are expected to encourage a slightly faster euro area growth rate in 2016 – though this forecast is dependent upon European policymakers handling the ongoing migrant crisis.

“In Europe, where the tide of refugees is presenting major challenges to the absorptive capacity of European Union labor markets and testing political systems, policy actions to support the integration of migrants into the labor force are critical to allay concerns about social exclusion and long-term fiscal costs, and unlock the potential long-term economic benefits of the refugee inflow.” 92

In 2015, Japanese real GDP growth remained subdued (+0.6 per cent) despite Prime Minister Shinzo Abe’s continued efforts to boost momentum.93 Japan has struggled with soft external demand for its high-tech exports as well as the looming threat of deflation.94

There have been signs of a gradual pickup in the Japanese economy driven by lower oil prices, accommodative lending conditions, and rising incomes. However, as is the case in many advanced economies, potential growth is limited by a shrinking labour force and as such, annual growth is not expected to exceed the 1.0 per cent level over the next few years.

“…The government is having trouble implementing policies that would make its rigid labour market more flexible and encourage more labour market participation among older and female workers. These steps are desperately required to counter the negative impact on economic growth of Japan’s rapidly aging population. The aging of the population has led to much weaker labour force growth and made it difficult for many companies to find the highly skilled workers they need.” 95

Early in 2016, the Bank of Japan joined the central banks of Sweden, Switzerland and Demark by announcing a surprising move into negative interest rate territory (to -0.1 per cent).96 In combination with its quantitative easing program, which involves the purchase of 80 trillion yen (approximately US$685 million) in assets annually, the Bank hopes to achieve its inflation target of 2.0 per cent as soon as possible. Consumer price inflation in Japan averaged below 1.0 per cent in 2015.



93 Scotia Economics, Asia-Pacific Regional Outlook, Winter 2016.



96 TD Economics, Data Release: Bank of Japan announces negative interest rates, January 29, 2016.

44 THE ECONOMY

Emerging EconomiesIn developing countries, growth in 2015 was a post-crisis low of 4.3 per cent, down from 4.9 per cent in 2014.97 In a development unprecedented since the 1980s, most of the largest emerging economies have slowed simultaneously for three consecutive years. Among the BRICS economies (Brazil, Russia, India, China, and South Africa), only India has managed to avert a deceleration. Given the size and high degree of global economic integration of these markets, significant negative spillover effects to the rest of the world are likely.

“Specifically, a 1 percentage point decline in growth in BRICS is associated with a reduction in growth over the following two years by 0.8 percentage points in other emerging markets, 1.5 percentage points in frontier markets, and 0.4 percentage points in the global economy. Spillovers could be considerably larger if the growth slowdown in BRICS were combined with financial market turbulence.” 98

Worsening prospects for emerging economies coincided with a slowdown in global trade, financial market volatility, and a decline in capital inflows. Although widely anticipated, the decision by the U.S. Federal Reserve late in 2015 to raise its benchmark interest rate for the first time in nearly a decade made emerging economies a less attractive destination for foreign investment and increased the cost of borrowing in these countries.99 Capital outflow and currency depreciation in emerging markets had already been severe prior to the interest rate hike in the U.S, with outflows expected to hasten as the U.S. raises rates further into 2016 and 2017.

!1#

!0.8#

!0.6#

!0.4#

!0.2#

0#

On#Impact# 1#Year# 2#Years#

Percen

tage)Point)Cha

nge)

Impact)of)a)1)Percentage)Point)Decline)in)BRICS)on)Growth,)Emerging)Markets)(excluding)BRICS))and)

Global)Economy)

EM#excl.#BRICS# Global#


0"

200"

400"

600"

800"

1000"

1200"

China"-"Inflows" Other"countries"-"Inflows"

China"-"Ou9lows"Other"countries"-"Ou9lows"

Billion

s'of'U

S$,'4.Qua

rter'Sum

'

Foreign'Capital'Inflows'and'Ou?lows'in'China'and'Other'Emerging'Economies,'Range'Since'2005'and'

2015,'Billions'of'US$'Range"since"2005" 2015"





99 Conference Board Economics Watch, Emerging Markets View, December 2015.

45 THE ECONOMY

The pace of China’s growth continued to slow in 2015, and the outlook for 2016 (for both China and much of the global economy) will be shaped by the government’s ability to manage the country’s ambitious and multifaceted structural reform process, with the aim of transforming China into a more consumer and services-oriented economy.100 The transition has become increasingly evident as China’s services sector accounted for about half of the economy late in 2015, and grew at a substantially faster pace (+8.4 per cent) compared to other sectors (+6.0 per cent). While China appears to have met its official growth target of “around 7 per cent” in 2015, issues such as a faster-than-expected slowdown in trade, substantial excess capacity in the industrial sector, an aging population, and financial market volatility will likely imply regular government intervention in the economy. This was apparent in early 2016, when the Chinese stock market dropped by more than 10 per cent in the first two weeks of the year, prompting the People’s Bank of China to intervene amid slumping global financial markets.

Brazil has been in recession since the first quarter of 2014, and is likely to remain so in 2016. Along with low oil prices, the Brazilian economy has struggled with high (and rising) rates of inflation and unemployment, low investment, and a potential political crisis with efforts to impeach President Rousseff.

In 2015, the Russian economy endured its worst contraction in six years, brought on by low oil prices, currency devaluation, economic sanctions, and a deteriorating labour market. In 2016, Russia is expected to recover modestly – though its conflicts involving Ukraine, Syria, and Turkey will intensify geopolitical uncertainty.

India was an exception among developing economies in 2015, with growth momentum encouraged by low oil and other commodity prices. In 2015, India surpassed China to become the world’s fastest growing major economy, and is expected to remain so through 2016-17. India is relatively insulated from China’s deceleration as less than 5.0 per cent of its exports are purchased by China compared to a regional average of more than 20 per cent. India’s top export destinations are the U.S. and euro area.

Overall, emerging economies are expected to face another challenging year in 2016, with China’s slowdown impeding trade growth, commodity prices, and confidence levels. Further, emerging market investment flows and currency values will be dampened as the U.S. continues on its path of interest rate normalization. Nonetheless, aggregate real GDP growth in emerging economies is forecast to pick up to 4.8 per cent and 5.3 per cent in 2016 and 2017 respectively, alongside rising demand in advanced economies.

U.S. Economic GrowthEarly estimates suggested that real GDP in the U.S. economy had increased by a disappointing 0.7 per cent (annualized) in the fourth quarter of 2015 – a significant deceleration relative to 2.0 per cent in the third quarter.101 Consumption spending, residential investment, and federal government spending were


100 Scotia Economics, Asia-Pacific Regional Outlook, Winter 2016.

101 Bureau of Economic Analysis, Gross Domestic Product: Fourth Quarter and Annual 2015 (Advanced Estimate), January 29, 2016.

46 THE ECONOMY

the primary growth drivers in the quarter, while inventories, trade, and nonresidential investment dragged on output.

The fourth quarter performance also compared unfavourably to 2015’s average pace of real GDP growth in the U.S. economy, which at 2.4 per cent was roughly the same as 2014. However, forecasters are confident that the slowing rate of U.S. growth is temporary and related to factors such as contractions in the oil and gas sector, and the appreciation of the dollar constraining exports amid already weak levels of global demand.

“The economy is performing better than the headline GDP number suggests. Growth patterns do not move in a straight line and the fourth quarter should prove to be a blip in the trajectory rather than a detour. The deceleration in domestic demand growth in the fourth quarter is notable, but is in part due to idiosyncratic factors that will reverse course going forward … Even with continued drag from the weak external environment, the American economy is in good stead to grow...” 102

Bolstered by a strengthening domestic labour market, relatively low interest rates, and a gradual stabilization of the global economy, economic growth in the U.S. is expected to accelerate to close to 3.0 per cent between 2016 and 2018.103 Over the long-term, average annual real GDP growth is forecast to decelerate to about 2.4 per cent through 2035 – attributable to a slowdown in domestic demand as both population and labour force growth decline due to the aging of the baby-boom generation. While the U.S. economy will likely expand at a faster rate than it did during the 2000 to 2010 period, a return to the higher growth of the 1990s is unlikely.

Consumer SpendingDespite some weak data for December and warmer-than-usual weather reducing utilities consumption, consumer spending in the U.S. increased by 2.2 per cent in the fourth quarter of 2015, beating expectations of 1.8 per cent.104 Consumers have continued to be a primary source of growth in the U.S. economy, but their rate of spending remains below that of prior periods of recovery.

0%#

1%#

2%#

3%#

4%#

5%#

1990*95# 1995*00# 2000*10# 2010*15# 2015*35#

Actual'and'Forecasted'Rates'of'U.S.'Real'GDP'Growth'by'Period'

Source: Conference Board of Canada, Long-Term Economic Forecast, 2015.


102 TD Economics, U.S. Economy Ended 2015 on a Weak Note, but Fundamentals Still Strong, January 14, 2016.

103 Conference Board of Canada, Long-Term Economic Forecast, 2015.

104 TD Economics, Data Release: Real GDP growth slows to 0.7% in the fourth quarter, but domestic spending holding up, January 29, 2016.

47 THE ECONOMY

“Deleveraging, historically weak wage growth and lack of retirement preparedness led to weak recovery in consumer spending. Consumption rose, on average, by only 2 percent during this expansion, compared with 4 percent in the 1990s and 3 percent in the 2001–2007 expansion.” 105

Core retail sales (which exclude autos and gasoline) were flat on the month in December 2015, coming up short of expectations for a 0.4 per cent jump.106 While price declines were partially to blame, lower sales were widespread across retail sectors. Only sporting goods (+0.9 per cent), furniture (+0.9 per cent), eating and drinking (+0.8 per cent) and building materials (+0.7 per cent) retailers managed to post significant gains on the month.

Similarly, auto sales in the U.S. had a somewhat disappointing end to 2015, coming in at 17.2 million units (annualized) in December – the lowest level since June and well below the 18.1 million units recorded in each of the prior three months.107 Nonetheless, the U.S. auto industry enjoyed its best sales year ever in 2015, hitting 17.39 million units to surpass the previous peak of 17.35 million units in 2000. Even with rising interest rates, forecasters expect auto sales to reach a new high in 2016 due to elevated demand, before edging down in 2017.

Looking ahead, consumer spending is expected to expand at a pace above 3.0 per cent in 2016 (which should boost exports among trading partners such as Canada), before tailing off to an average annual gain in the 2.5 per cent range.108 Due to an aging population with a greater proportion entering their high-saving pre-retirement years, long-term growth in consumer spending is expected to slow (particularly for durable goods) to an average annual rate closer to 2.0 per cent.

InvestmentUnsurprisingly, the oil and gas sector recorded the most pronounced reduction in investment spending during 2015. While oil and gas represents less than 1.0 per cent of the U.S. economy, spending cuts trimmed 0.4 percentage points from annual GDP growth.109 The good news is that the sector is now half of its former size, meaning that any potential future declines will have less impact. Moreover, past cuts to investment in the U.S. oil sector should help to stabilize prices somewhat due to lower production.

Another factor that acted to reduce investment was a contraction in inventory spending. Inventories accumulated during the first half of the year due to slow sales, given weak global demand and the high


105 Conference Board Economics Watch, US View, December 21, 2015.

106 TD Economics, Data Release: Retail sales end 2015 on a subdued note as warm weather keeps winter wear on store shelves, January 15, 2016.



109 TD Economics, The Weekly Bottom Line, December 24, 2015.

48 THE ECONOMY

value of the U.S. dollar. As a result, inventory investment subtracted 0.7 percentage points from GDP growth in the third quarter, and as much as 0.9 points in the fourth quarter.110

Forecasters expect rising interest rates along with the appreciated U.S. dollar (which makes exports more costly) to restrain investment spending over the next two years. Once oil prices begin to recover to the breakeven threshold for energy firms, investment should gradually pick up.111

TradeIn trade-weighted terms, the U.S. dollar appreciated by about 9.0 per cent annually in both 2014 and 2015 – which on top of already soft global demand represented another headwind to exporters. The resulting decline in net exports pushed the current account deficit from about $400 billion in 2014 to $528 billion in 2015, subtracting 0.5 percentage points from GDP growth. In the fourth quarter of 2015, exports declined by 7.8 per cent (annualized) compared to a 2.5 per cent drop in imports.112

In 2016, the still-modest global growth environment and lofty U.S. dollar are expected to cut another 0.6 percentage points from GDP growth. Importantly, this forecast is based on the assumption that the U.S. dollar will reach a peak during the first quarter of 2016 before edging down gradually.

Overall, trade has positively contributed to U.S. economic growth since the onset of the recovery in 2009. However, exports have expanded at a substantially slower pace during this period relative to prior recoveries. The ongoing U.S. recovery has been one of the most prolonged since the World War II era, but has also been characterized by uncommonly low rates of growth across most major sectors of the economy.

Labour MarketOne of the strongest aspects of the U.S. economy in 2015 was its labour market, where consistent employment growth provided the impetus for the Federal Reserve to increase its overnight rate late in 2015, ending seven years of near-zero interest rates.113 The Fed stressed that the interest rate normalization path would be gradual and dependent upon a further firming of economic conditions,

!1%$

1%$

3%$

5%$

7%$

9%$

GDP$ Consump3on$ Nonresiden3al$Investment$

Exports$ Government$Spending$

Average'Annualized'Real'Growth'by'Sector'and'Period'(U.S.)'

Q1$1991$!$Q1$2001$ Q4$2001$!$Q4$2007$ Q2$2009$!$current$

Source: Conference Board Economics Watch, US View, December 21, 2015.




112 Scotia Economics, U.S. Trade Deficit Improves – But Not For The Right Reasons, January 6, 2016.

113 BMO Economics, Focus, December 23, 2015.

49 THE ECONOMY

with forecasters anticipating rate increases to reach 1.25 per cent (from the current position of 0.25 to 0.50 per cent) by the end of 2016.

In December 2015, employment rose by an estimated 292,000, significantly above expectations of a 200,000 increase.114 For the year as a whole, an average of 221,000 jobs were added per month, down from about 260,000 in 2014 but better than any other year since 1999. By sector, job growth in 2015 was most pronounced in education and health services (+655,000), professional and business services (+605,000) and leisure and hospitality (+419,000). Only the mining and logging sector (which includes the oil and gas industry) posted a decline over the year (-131,000).

The unemployment rate remained unchanged in the fourth quarter of 2015 at 5.0 per cent, but was down over the course of the year from 5.6 per cent in December 2014.115 Part of the reason the unemployment rate did not decline further during the fourth quarter was a surprising upturn in the participation rate, which had trended down steadily since 2007. While the rise in participation was slight (from 62.4 per cent in September 2015 to 62.6 per cent in December), the trend appears to have continued into 2016 with another 0.1 percentage point increase in January 2016. A rising participation rate suggests that discouraged workers (who are unaccounted for in most unemployment measures) may be returning to the labour force.

Forecasters expect that the unemployment rate could fall as low as 4.5 per cent in 2016. Historically slow growth in U.S. demographics should allow for continued employment gains to generate further, significant reductions in the overall rate of unemployment.

“Given the rate of population growth, we won’t need to see much in terms of employment gains to stay at full employment in this cycle. Indeed, an average payroll increase of 100K or even below would be sufficient.” 116

!200$ 0$ 200$ 400$ 600$ 800$

Mining$and$logging$U1li1es$

Manufacturing$Informa1on$

Wholesale$trade$Other$services$

Transporta1on$and$warehousing$Government$

Financial$ac1vi1es$Construc1on$Retail$trade$

Leisure$and$hospitality$Professional$and$business$services$

Educa1on$and$health$services$

Thousands)of)Jobs)

Year0over0Year)Change)in)U.S.)Employment)by)Industry,)December)2014)to)December)2015)

Source: Bureau of Labor Statistics, The Employment Situation – December 2015, January 8, 2016.


114 TD Economics, Data Release: No slowing the U.S. job machine, January 8, 2016.

115 Bureau of Labor Statistics, The Employment Situation – December 2015, January 8, 2016.


50 THE ECONOMY

Labour Market Review

Calgary Census Metropolitan Area (CMA)

EmploymentThe Calgary economy continued to shed jobs in the final quarter of 2015. Employment in the Calgary CMA declined by 6,700 in December 2015, following decreases of 5,200 in November and 3,700 in October. Overall, employment was down by 8,300 or 1.0 per cent on a quarterly basis in the fourth quarter of the year, following a similar loss in the third quarter of 2015.

On a year-over-year basis, employment in the Calgary CMA was little changed in the final quarter of 2015, up only 1,500 compared to the fourth quarter of 2014.

Labour Force Survey Statistics - Calgary CMA

Calgary CMA Oct-15 Nov-15 Dec-15Population 1,188,000 1,190,100 1,191,800Labour Force 874,100 868,900 862,400

Employed 814,100 808,900 802,200Unemployed 60,100 60,000 60,100

Participation Rate 73.6% 73.0% 72.4%Employment Rate 68.5% 68.0% 67.3%Unemployment Rate 6.9% 6.9% 7.0%Source: Statistics Canada, CANSIM Table 282-0135, Labour Force Survey, 3-month moving average, seasonally adjusted

Q4 2015 Q3 2015Quarterly Change Q4 2014

Annual Change

1,190,000 1,183,100 6,900 1,158,200 31,800868,500 877,200 -8,700 847,200 21,300808,400 816,700 -8,300 806,900 1,50060,100 60,600 -500 40,300 19,80073.0% 74.1% -1.2% 73.2% -0.2%67.9% 69.0% -1.1% 69.7% -1.7%6.9% 6.9% 0.0% 4.8% 2.2%

Source: Statistics Canada, CANSIM Table 282-0135, Labour Force Survey, 3-month moving average, seasonally adjusted

700,000$

720,000$

740,000$

760,000$

780,000$

800,000$

820,000$

840,000$

Dec,11

$

Mar,12$

Jun,12$

Sep,12$

Dec,12

$

Mar,13$

Jun,13$

Sep,13$

Dec,13

$

Mar,14$

Jun,14$

Sep,14$

Dec,14

$

Mar,15$

Jun,15$

Sep,15$

Dec,15

$

Employmen

t*

Employment*in*the*Calgary*CMA*



LABOUR MARKET REVIEWThis section examines labour market information for the Calgary Region, Alberta and Canada.

51

Year-over-year employment gains in six industries were offset by losses in eight industries. The most significant year-over-year employment gains were in health care and social assistance (+9,900), accommodation and food services (+9,000) and trade (+8,500). The mining and oil and gas industry (-7,200), along with construction (-7,900), manufacturing (-6,800) and professional, scientific and technical services (-6,000) - industries most closely tied to oil and gas - recorded the most notable year-over-year employment losses in the final quarter of 2015.

Overall, the Conference Board of Canada has forecasted employment in the Calgary CMA to decline by 0.9 per cent in 2016.117

Employment in Calgary’s services-producing sector is forecast to decline by 0.9 per cent in 2016. Growth in business services, finance, insurance and real estate and information and cultural industries is projected to be offset by employment losses in transportation and warehousing, personal services and public administration. Employment growth is forecast to be flat in wholesale and retail trade.

Employment in Calgary’s goods-producing sector is projected to decline by 1.1 per cent in 2016. Employment growth in manufacturing is expected to be offset by net job losses in construction and primary and utilities industries.118

UnemploymentCalgary’s unemployment rate hit 7.0 per cent in December 2015, marking the third time in 2015 the unemployment rate has reached this level. Prior to August 2015, the Calgary CMA had not recorded an unemployment rate of 7.0 per cent since June 2010. Overall, Calgary’s unemployment rate averaged 6.9 per cent in the final quarter of 2015, unchanged from the previous quarter but up significantly from 4.8 per cent in the fourth quarter of 2014.

!7,900&!7,200&!6,800&!6,000&!5,000&

!2,700&!2,700&

!1,100&600&

3,200&3,900&5,000&

8,500&9,000&9,900&

!15,000&!10,000&!5,000& 0& 5,000& 10,000&15,000&

Construc5on&Forestry,&fishing,&mining,&oil&&&gas&

Manufacturing&Prof.,&scien5fic&&&tech.&services&Transporta5on&&&warehousing&

Bus.,&bldg.&&&other&support&services&Public&administra5on&Educa5onal&services&

Other&services&Fin.,&insurance,&real&est.&&&leasing&Informa5on,&culture&&&recrea5on&

U5li5es&Trade&

Accommoda5on&&&food&services&Health&care&&&social&assistance&

Annual&Change&in&Employment&by&Industry&Calgary&CMA&8&Q4&2015&



117 The Conference Board of Canada, Metropolitan Outlook1, Autumn 2015.

118 Ibid.

52 LABOUR MARKET REVIEW

The number of unemployed people in the Calgary CMA averaged 60,100 in the fourth quarter of 2015, relatively unchanged from the previous quarter but up nearly 20,000 year-over-year.

Calgary had the fourth highest average unemployment rate among major metropolitan areas in the final quarter of 2015. Montreal (8.7 per cent), Saint John (7.6 per cent) and Toronto (7.0 per cent) recorded the highest average unemployment rates, while Regina (4.1 per cent) and Quebec City (4.9 per cent) posted the lowest rates in the fourth quarter of 2015.

4.1$4.9$

5.8$ 5.9$ 6.1$ 6.2$ 6.2$ 6.2$ 6.3$ 6.4$ 6.9$ 7.0$7.6$

8.7$

0.0$1.0$2.0$3.0$4.0$5.0$6.0$7.0$8.0$9.0$10.0$

Regina$$

Québec$

Vancouver$

Winnipeg$

Halifax$

Saskatoon$

Edmonton$$

Victoria$

OJawaLGaNneau$

St.$John's$

Calgary$

Toronto$

Saint$John$

Montréal$

Une

mploymen

t*Rate*(%

)*

Unemployment*Rates*of*Canadian*CMAs,*Q4*2015*




Alberta

EmploymentThe Alberta labour market recorded three consecutive months of net job losses in the final quarter of 2015. Employment dropped by 3,900 positions in December 2015, following even larger losses in November (-9,400) and October (-11,900). Overall, employment in the province declined by 12,500 or 0.5 per cent in the fourth quarter of 2015 compared to the previous quarter. Year-over-year, employment was down by 4,900 or 0.2 per cent.

Labour Force Statistics - Alberta

Among Alberta’s major economic regions, Edmonton had the highest rate of annual employment growth at 3.5 per cent in the fourth quarter of 2015.

“Focusing on Alberta's largest centres, Calgary and Edmonton posted very different results. Calgary's employment growth trended downwards in 2015 [...]. In contrast, Edmonton's annual employment growth had improved significantly by the fourth quarter, with 27,200 more people working in the region year over year. This was the result of strong service-sector growth, while a flurry of projects in Edmonton's downtown-core helped boost construction employment to a record high. Furthermore, this growth was the result of increased full-time employment, as opposed to the pullback that occurred in Calgary and most other regions in the province.” 119

Alberta Oct-15 Nov-15 Dec-15Population 3,373,500 3,377,000 3,379,000Labour Force 2,462,400 2,460,600 2,457,100

Employed 2,299,400 2,290,000 2,286,100Unemployed 163,000 170,600 171,000

Participation Rate 73.0% 72.9% 72.7%Employment Rate 68.2% 67.8% 67.7%Unemployment Rate 6.6% 6.9% 7.0%Source: Statistics Canada, CANSIM Table 2820087, Labour Force Survey, seasonally adjusted


Annual Change

3,376,500 3,365,100 11,400 3,311,900 64,6002,460,000 2,459,400 600 2,406,000 54,0002,291,800 2,304,300 -12,500 2,296,700 -4,900

168,200 155,000 13,200 109,200 59,00072.9% 73.1% -0.2% 72.6% 0.2%67.9% 68.5% -0.6% 69.3% -1.5%6.8% 6.3% 0.5% 4.5% 2.3%

Source: Statistics Canada, CANSIM Table 2820087, Labour Force Survey, seasonally adjusted

!5.8%&

!5.0%&

!4.3%&

!0.3%&

0.5%&

0.9%&

3.5%&

!8.0%& !6.0%& !4.0%& !2.0%& 0.0%& 2.0%& 4.0%&

Red&Deer&

Camrose&!&Drumheller&

Banff!Athabasca&

Wood&Buffalo!Cold&Lake&

Calgary&

Lethbridge&!&Medicine&Hat&

Edmonton&

Change'in'Employment'by'Economic'Region'in''Alberta'Q4'2014'to'Q4'2015'(year<over<year'per'cent'change)'

Source: Statistics Canada, CANSIM table 282-0122, 3-month moving average, seasonally unadjusted


119 Government of Alberta, Job Bank, Labour Market Bulletin - Alberta: December 2015.


Annual employment growth was negative in four out of seven of Alberta's economic regions in the fourth quarter of 2015. Employment in the Red Deer region declined nearly 6.0 per cent, while employment in the Camrose-Drumheller region was down 5.0 per cent.

Full-time employment in Alberta fell sharply by 24,700 (-1.3 per cent) quarter-over-quarter, outweighing the 12,300 increase in part-time employment. On a year-over-year basis, 31,100 full-time positions were lost in the final quarter of 2015, while part-time employment rose by 26,200 or 7.0 per cent.

“Part-time employment, driven by involuntary part-time workers120, tends to move with the business cycle; low during boom times and rising during tougher times. With labour market conditions weakening in 2015, part-time employment [in Alberta] has increased by 3.6% over the first 10 months of the year. At the same time, involuntary part-time employment has increased 14.4% year-to-date, accounting for over 70% of the increase in part-time employment. However, the increase in involuntary part-time workers so far this year is significantly lower than the 2009 recession.” 121

All the job losses in the final quarter of 2015 were among men, with employment declining by 13,400 compared to the previous quarter. Employment for women was relatively unchanged quarter-over-quarter (+900). On an annual basis, employment for men declined significantly in the fourth quarter (-23,700), outweighing gains in employment for women (+18,800).

All three of the major age categories posted job losses on a quarterly basis in the final quarter of 2015. Year-over-year, employment for Albertans aged 55 and older increased by 18,300, but these gains were offset by losses among youth aged 15 - 24 (-19,400) and adults aged 25 - 54 (-3,800). In November 2015, the unemployment rate for male youth aged 15 - 24 hit 15.1 per cent, the second highest level since August 2009 (16.6 per cent).122


120 People who usually work less than 30 hours a week at their main or only job because of poor business conditions or because they could not find work with 30 or more hours.

121 Alberta Treasury Board and Finance, Labour Market Notes, November 6, 2015, p.2.



Employment by Type of Work, Gender and Age - Alberta

Employment in Alberta’s goods-producing sector fell by 9,100 net jobs on a quarterly basis in the fourth quarter of 2015. All the industries in the goods-producing sector recorded job losses, led by, forestry, fishing, mining, oil and gas (-4,300 or -2.7 per cent) and agriculture (-2,300 or -3.7 per cent).

Year-over-year, employment in the goods-producing sector was down by 30,900 (or -4.0 per cent) in the final quarter, led by an 11.5 per cent decrease (-19,800 net jobs) in the forestry, fishing, mining and oil and gas industry.

“Employment in Alberta's resource extraction industries decreased again [in the fourth quarter of 2015], marking a fifth consecutive quarterly decline. Year-over-year, there were 19,700 fewer people working in these industries. A majority of these losses occurred in the energy services industry, including layoffs at oilfield drilling and maintenance firms such as Trican, Schlumberger, and Weatherford. Falling commodity prices continued to negatively impact oil and gas producers, along with coal mining operations in the province. At the start of October, North American benchmark crude oil prices stood around $47 US per barrel, but sank to $37 US by the end of December.” 123

Employment in Alberta’s services-producing sector also fell by 3,500 or 0.2 per cent in the fourth quarter of 2015 relative to the previous quarter. The most notable employment losses were in transportation and warehousing (-5,200), accommodation and food services (-5,100) and other services (-4,400). The public-sector continued to add jobs in the fourth quarter with higher employment in

AlbertaEmploymentFull-timePart-timeMenWomen15 - 24 years25 - 54 years55 years +Source: Statistics Canada, CANSIM Table 282-0087, Labour Force Survey, seasonally adjusted


Annual Change

2,291,800 2,304,300 -12,500 2,296,700 -4,9001,890,300 1,915,000 -24,700 1,921,400 -31,100

401,600 389,300 12,300 375,400 26,2001,250,700 1,264,100 -13,400 1,274,400 -23,7001,041,100 1,040,200 900 1,022,300 18,800

311,600 319,000 -7,400 331,000 -19,4001,550,200 1,553,100 -2,900 1,554,000 -3,800

430,000 432,200 -2,200 411,700 18,300Source: Statistics Canada, CANSIM Table 282-0087, Labour Force Survey, seasonally adjusted

!19,800'!11,500'!10,200'

!8,800'!8,100'!5,200'!2,500'!1,800'!1,400'

1,600'3,700'6,400'

12,200'12,800'13,500'13,900'

!30,000'!20,000'!10,000' 0' 10,000' 20,000'

Forestry,'fishing,'mining,'oil'&'gas'Other'services'

TransportaCon'&'warehousing'Manufacturing'

AccommodaCon'&'food'services'Prof.,'scienCfic'&'tech.'services'

Agriculture'Fin.,'insurance,'real'estate'&'leasing'

ConstrucCon'UCliCes'

Bus.,'bldg.'&'other'support'services'InformaCon,'culture'&'recreaCon'

Trade'EducaConal'services'

Health'care'&'social'assistance'Public'administraCon'

Annual&Change&in&Employment&by&Industry&Alberta&7&Q4&2015&

Source: Statistics Canada, CANSIM table 282-0088, seasonally adjusted


123 Government of Canada Job Bank, Labour Market Bulletin Alberta: December 2015.


educational services (+5,400), health care and social assistance (+1,100), and public administration (+1,000).

Year-over-year, services-sector employment was up 25,700 or 1.6 per cent in the final quarter of 2015. Six of eleven industries in the sector posted annual gains, led by public administration, health care and social assistance (+13,500), educational services (+12,800) and trade (+12,200). Employment in other services declined by 11,500 or 9.4 per cent year-over-year in the fourth quarter of 2015.

Employment by Industry - Alberta

Looking ahead, employment in Alberta is forecast to decline by between -0.6 per cent (Scotia) and -1.6 per cent (BMO) in 2016. In 2017, employment growth is projected to average between 0.2 per cent (BMO) and 1.6 per cent (RBC).124

“Private-sector hiring has fallen sharply year to date in November 2015 with further weakness expected as firms continue to face cost pressures. Total employment in the province has dipped only modestly below year-ago levels, as public-sector hiring has largely absorbed the excess slack; however, as the unsustainable pace of growth in this sector diminishes, overall employment declines are set to dominate in 2016. As a result, further upward pressure on the province’s unemployment rate is expected to materialize.” 125

AlbertaAll IndustriesAgricultureForestry, fishing, mining, oil & gasUtilitiesConstructionManufacturingTradeTransportation & warehousingFinance, insurance, real estate & leasingProfessional, scientific & technical servicesBusiness, building & other support servicesEducational servicesHealth care & social assistanceInformation, culture & recreationAccommodation & food servicesOther servicesPublic administrationSource: Statistics Canada, CANSIM Table 2820088, Labour Force Survey, seasonally adjusted


Annual Change

2,291,800 2,304,300 -12,500 2,296,700 -4,90059,700 62,000 -2,300 62,200 -2,500

152,100 156,400 -4,300 171,900 -19,80019,600 21,000 -1,400 18,000 1,600

258,500 259,100 -600 259,900 -1,400137,900 138,400 -500 146,700 -8,800325,600 324,300 1,300 313,400 12,200130,700 135,900 -5,200 140,900 -10,200103,300 104,200 -900 105,100 -1,800176,200 174,500 1,700 181,400 -5,20083,700 82,700 1,000 80,000 3,700

144,200 138,800 5,400 131,400 12,800266,600 265,500 1,100 253,100 13,50078,000 77,400 600 71,600 6,400

147,300 152,400 -5,100 155,400 -8,100110,500 114,900 -4,400 122,000 -11,500

97,900 96,900 1,000 84,000 13,900Source: Statistics Canada, CANSIM Table 2820088, Labour Force Survey, seasonally adjusted


124 RBC Economics, Provincial Outlook, December 2015, TD Economics, Provincial Economic Forecast January 2016, BMO Economics, Provincial Economic Outlook, February 2016, Scotia Economics, Global Forecast Update, February 2016.

125 RBC Economics, Provincial Outlook, December 2015,


UnemploymentAlberta had an average of 168,200 unemployed people in the fourth quarter of 2015, up 13,200 from the previous quarter and up 59,000 compared to the final quarter of 2014. The province’s unemployment rate rose to an average of 6.8 per cent this quarter, up from 6.3 per cent in the third quarter and from 4.5 per cent year-over-year. In December 2015, Alberta’s unemployment rate hit 7.0 per cent, a rate not seen since April 2010.126

Among the economic regions in Alberta, the Wood Buffalo-Cold Lake region had the highest average unemployment rate in the fourth quarter of 2015 at 8.0 per cent, up from 4.8 per cent the previous year. The Camrose-Drumheller region had the lowest unemployment rate among Alberta’s economic regions at 4.0 per cent, up from 3.0 per cent a year earlier.

Alberta’s unemployment rate is forecast to average between 6.9 per cent (RBC) and 7.6 per cent (BMO) in 2016 and between 5.7 per cent (RBC) and 7.6 per cent (BMO) in 2017.127

The average duration of unemployment in Alberta increased to 13.8 weeks in December 2015, from 12.6 weeks in December 2014. For Alberta women, the average duration of unemployment was 15.9 weeks, compared to 12.7 weeks for men. At the national level, the average length of unemployment declined slightly to 19.9 weeks in December 2015, from 20.1 weeks the previous year. Alberta had the lowest average duration of unemployment in December 2015 at 13.8 weeks, followed by Saskatchewan (14.6 weeks) and Prince Edward Island (16.2 weeks). Quebec and Nova Scotia recorded the highest figure at 23 weeks.

The number of long-term unemployed in Alberta (those jobless for 27 weeks or more) more than doubled to 25,400 in December 2015, from 10,600 in December 2014, and accounted for 15.5 per cent of the total unemployed in the province. Nationally, the number of long-term unemployed (255,800) made up almost 20 per cent of the total unemployed in December 2015.128

0"

5"

10"

15"

20"

25"

Dec)09

"Mar)10"

Jun)10"

Sep)10"

Dec)10

"Mar)11"

Jun)11"

Sep)11"

Dec)11

"Mar)12"

Jun)12"

Sep)12"

Dec)12

"Mar)13"

Jun)13"

Sep)13"

Dec)13

"Mar)14"

Jun)14"

Sep)14"

Dec)14

"Mar)15"

Jun)15"

Sep)15"

Dec)15

"

Average'weeks'of'u

nemploymen

t'

Dura5on'of'Unemployment,'Canada'and'Alberta'

Canada" Alberta"

Source: Statistics Canada, CANSIM table 282-0047, seasonally unadjusted



127 RBC Economics, Provincial Outlook, December 2015, TD Economics, Provincial Economic Forecast January 2016, BMO Economics, Provincial Economic Outlook, February 2016, Scotia Economics, Global Forecast Update, February 2016.



Canada

EmploymentEmployment in Canada rose by 22,800 in December 2015, following a loss of 32,900 net jobs the previous month and a gain of 43,100 jobs in October. Overall, employment in Canada increased by 39,400 on a quarterly basis in the final quarter of the year, building on a gain of 34,000 jobs in the third quarter of 2015. On a year-over-year basis, Canadian employment rose by 140,900 or 0.8 per cent in the fourth quarter of 2015.

“The headline job gain [in December 2015] was consistent with expectations that the distorting effects of lost election-related jobs the prior month would shake out and restore growth this month and so the gain itself carries little useful information. More important is that the details behind the headline gain were generally soft. On balance and for the year as a whole, Canadian job markets were very resilient in the face of the plunge in commodity prices; the question mark is whether such gains are sustainable into 2016 and the composition of recent numbers raises serious question marks.” 129

Labour Force Survey Statistics - Canada

Employment growth forecasts from Canada’s major banks are in the range of 0.5 to 0.8 per cent for 2016 and 0.6 to 1.0 per cent for 2017. TD Economics is forecasting employment in Canada to increase by 0.6 per cent in 2016, led by growth in British Columbia (1.8 per cent), Ontario (0.9 per cent) and Quebec (0.9 per cent). Employment is projected to decline in Newfoundland and Labrador, Saskatchewan and Alberta in 2016.

“The current woes in Alberta represent both a curse and a blessing for the B.C. and Ontario economies. Cross-border goods and services trade flows are significant, so when Alberta’s economy struggles, supplier industries in both provinces feel the pinch. However, B.C. and Ontario (and notably the former) are poised to benefit over the next few years from increased

Canada Oct-15 Nov-15 Dec-15Population 29,377,500 29,401,200 29,419,000Labour Force 19,376,400 19,351,900 19,397,300

Employed 18,021,000 17,988,100 18,010,900Unemployed 1,355,300 1,363,900 1,386,400

Participation Rate 66.0% 65.8% 65.9%Employment Rate 61.3% 61.2% 61.2%Unemployment Rate 7.0% 7.0% 7.1%Source: Statistics Canada, CANSIM Table 2820087, Labour Force Survey, seasonally adjusted


Annual Change

29,399,200 29,323,300 75,900 29,094,300 304,90019,375,200 19,312,300 62,900 19,142,300 232,90018,006,700 17,967,300 39,400 17,865,800 140,9001,368,500 1,345,000 23,500 1,276,500 92,000

65.9% 65.9% 0.0% 65.8% 0.1%61.2% 61.3% 0.0% 61.4% -0.2%7.1% 7.0% 0.1% 6.7% 0.4%



129 Scotiabank, Global Economics, ScotiaFlash, Weakness Lurks Beneath Headline Canadian Job Gain, January 8, 2016.


provincial in-migration of workers, which will provide support to their retail, housing and employment markets.” 130

In 2017, positive employment growth, though weak, is projected for all provinces, led by Quebec (0.9 per cent) and British Columbia (0.7 per cent).

Part-time employment in Canada rose by 29,800 net new positions on a quarterly basis in the final quarter of 2015, while full-time gains were modest (+9,600).Year-over-year, however, employment gains were skewed toward full-time employment (+174,700) as part-time jobs declined by 33,800.

Women accounted for almost all the job gains on a quarterly basis this quarter, as the number of women employed in Canada increased by 38,200 or 0.5 per cent. Year-over-year, employment growth for women (+0.9 per cent) slightly outpaced employment growth for men (+0.7 per cent) in the final quarter of 2015.

Among the major age groups in Canada, only those aged 55 and older recorded employment growth in the final quarter of 2015, partly the result of growth in their population.131 Year-over-year, employment rose by 196,700 or 5.6 per cent among people aged 55 and older and declined by 49,000 among youth aged 15 to 24 and by 6,800 among those aged 25 - 54.

Employment by Type of Work, Gender and Age - Canada

CanadaEmploymentFull-timePart-timeMenWomen15 - 24 years25 - 54 years55 years +Source: Statistics Canada, CANSIM Table 2820087, Labour Force Survey, seasonally adjusted


Annual Change

18,006,700 17,967,300 39,400 17,865,800 140,90014,611,800 14,602,200 9,600 14,437,100 174,7003,394,900 3,365,100 29,800 3,428,700 -33,8009,446,700 9,445,600 1,100 9,382,100 64,6008,560,000 8,521,800 38,200 8,483,700 76,3002,456,200 2,461,900 -5,700 2,505,200 -49,000

11,859,500 11,888,300 -28,800 11,866,300 -6,8003,691,000 3,617,100 73,900 3,494,300 196,700




131 Statistics Canada, Labour Force Survey, October 2015, November 6, 2015.


Canada’s services-producing sector added 21,300 net jobs on a quarterly basis in the fourth quarter of 2015, led by gains in health care and social assistance (+22,200), public administration (+16,100) and professional, scientific and technical services (+11,900). In October alone, employment increased by 32,000 in public administration, mainly in work related to the federal election.

“The increase was seen across all provinces and mostly in temporary work, coinciding with activities related to the recent federal election. Note that the Labour Force Survey reference week ran from October 11 to 17. Advanced polling took place from October 9 to the 12 and the election was held on October 19.” 132

Employment in Canada’s goods-producing sector rose by 17,900 quarter-over-quarter. Job gains in manufacturing (+17,800) and agriculture (+8,500) more than offset losses in the natural resources133 (-5,800) and utilities industries (-6,600).

Year-over-year, employment increased by 79,400 (+3.5 per cent) in health care and social assistance, accounting for about 55 per cent of the net new jobs in Canada in the fourth quarter of 2015. Net job gains were also significant in professional, scientific and technical services (+53,500 or +4.0 per cent), manufacturing, (+21,100 or +1.2 per cent) and business, building and other support services (+20,700 or +2.8 per cent). Six industries recorded annual employment losses this quarter. Accommodation and food services recorded the greatest net loss (-25,400), followed by forestry, fishing, mining, oil and gas (-23,800) and construction (-17,400).

!25,400'!23,800'!17,400'!10,300'

!5,100'!1,200'

3,300'4,400'4,400'9,000'11,600'16,500'20,700'21,100'

53,500'79,400'

!60,000'!30,000' 0' 30,000' 60,000' 90,000'

Accommoda4on'&'food'services'Forestry,'fishing,'mining,'oil'&'gas'

Construc4on'Other'services'

U4li4es'Agriculture'

Educa4onal'services'Trade'

Informa4on,'culture'&'recrea4on'Transporta4on'&'warehousing'

Fin.,'insurance,'real'estate'&'leasing'Public'administra4on'

Bus.,'bldg.'&'other'support'services'Manufacturing'

Prof.,'scien4fic'&'tech.'services'Health'care'&'social'assistance'

Annual&Change&in&Employment&by&Industry&Canada&7&Q4&2015&



132 Ibid.

133 Forestry, fishing, mining and oil and gas.


Employment by Industry - Canada

UnemploymentCanada’s unemployment rate averaged 7.0 per cent in the fourth quarter of 2015, up from 6.9 per cent the previous quarter and from 6.7 per cent in the fourth quarter of 2014.

Saskatchewan had the lowest average unemployment rate among provinces in the final quarter of 2015 at 5.5 per cent, followed by Manitoba (5.8 per cent) and British Columbia (6.4 per cent). Alberta’s unemployment rate jumped to an average of 6.8 per cent in the fourth quarter, matching Ontario’s.

Newfoundland and Labrador had the highest unemployment rate this quarter, increasing 2.0 percentage points to an average of 13.6 per cent.

CanadaAll IndustriesAgricultureForestry, fishing, mining, oil & gasUtilitiesConstructionManufacturingTradeTransportation & warehousingFinance, insurance, real estate & leasingProfessional, scientific & technical servicesBusiness, building & other support servicesEducational servicesHealth care & social assistanceInformation, culture & recreationAccommodation & food servicesOther servicesPublic administrationSource: Statistics Canada, CANSIM Table 2820088, Labour Force Survey, seasonally adjusted


Annual Change

18,006,700 17,967,300 39,400 17,865,800 140,900298,200 289,700 8,500 299,400 -1,200349,900 355,700 -5,800 373,700 -23,800132,500 139,100 -6,600 137,600 -5,100

1,366,900 1,362,900 4,000 1,384,300 -17,4001,726,700 1,708,900 17,800 1,705,600 21,1002,732,200 2,736,000 -3,800 2,727,800 4,400

912,400 922,100 -9,700 903,400 9,0001,105,300 1,106,100 -800 1,093,700 11,6001,386,900 1,375,000 11,900 1,333,400 53,500

765,500 762,400 3,100 744,800 20,7001,260,200 1,277,300 -17,100 1,256,900 3,3002,322,700 2,300,500 22,200 2,243,300 79,400

758,300 753,700 4,600 753,900 4,4001,198,600 1,203,700 -5,100 1,224,000 -25,400

762,900 763,000 -100 773,200 -10,300927,400 911,300 16,100 910,900 16,500


0.0%$

2.0%$

4.0%$

6.0%$

8.0%$

10.0%$

12.0%$

14.0%$

Canada$

NL$

PE$

NS$

NB$

QC$

ON$

MB$

SK$

AB$

BC$

Unemployment*Rates,*Canada*and*Provinces*

Q4$2014$ Q4$2015$




Forecasts for Canada’s unemployment rate are in the range of 7.1 to 7.3 per cent for 2016 and 7.0 to 7.1 per cent for 2017.134 Scotiabank projects the national unemployment rate to average 7.3 per cent this year. Manitoba (5.7 per cent) and Saskatchewan (6.1 per cent) are forecast to post the lowest unemployment rates in 2016, while the unemployment rates in the Atlantic provinces are expected to be in the range of 8.5 to 13.6 per cent.135

Job VacanciesEmployers in Canada had an estimated 233,500 job vacancies in October 2015. With approximately 1.32 million unemployed in the same month, Canada had 5.7 unemployed people for every job vacancy, up from 5.1 in October 2014.136

The western provinces had the lowest ratios of unemployment to job vacancies in October 2015. British Columbia had the lowest ratio at 4.0 unemployed for every job vacancy, while Newfoundland and Labrador had the highest ratio at 12 unemployed for every job vacancy.

With 34,800 vacancies and 152,800 unemployed in October 2015, Alberta’s ratio was 4.4, up from 2.2 the previous year.

Among the major industry sectors in Canada, unemployment to job vacancies ratios ranged from about one unemployed person for every job vacancy in health care and social assistance and finance and insurance to approximately 13 unemployed people for every vacant job in educational services. Unsurprisingly, the mining and oil and gas industry posted a notable increase in its unemployment to job vacancy ratio, with 11.7 unemployed people for every vacant job in October 2015, up from 4.4 the previous year.

12.0%

8.5% 8.2%6.6% 6.1% 5.7% 5.1% 4.8% 4.4% 4.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

NL%

NS%

NB%

QC%

ON%

PE%

Canada%

SK%

MB%

AB%

BC%

Ra#o

%Unemployment.to.Job%Vacancies%Ra#o,%Canada%and%

Provinces,%three%month%average%October%2014%and%2015%

Oct<14% Oct<15%

Source: Statistics Canada, CANSIM table 284-0003. The ratio for PEI in October 2015 is too unreliable to be published.


134 CIBC World Markets, Economic Insights, Economic Update, January 28, 2016, Scotiabank, Global Economics, Global Forecast Update, February 1, 2016, BMO Capital Markets Economics, CanadianEconomic Outlook, January 29, 2016, TD Economics, Canadian Provincial Economic Forecast, January 26, 2016.

135 Scotia Bank, Global Economics, Global Forecast Update, February 1, 2016.



Unemployment-to-Job Vacancies Ratio, Select IndustriesThree-Month Average, October 2014 and 2015

Industry Oct-14 Oct-15Educational services 11.1 13.4Mining & oil & gas 4.4 11.7Construction 4.7 8.8Arts, entertainment & recreation 7.1 6.8Manufacturing 4.5 5.0Retail trade 2.7 4.6Transportation & warehousing 1.9 3.0Professional, scientific & technical 2.0 2.8Information & culture 2.1 2.7Administrative & support services 4.7 2.7Other services 2.0 2.5Wholesale trade 1.4 2.4Accommodation & food services 2.5 2.3Public administration 1.3 1.6Health care & social assistance 1.4 1.3Finance & insurance 2.1 1.1Source: Statistics Canada CANSIM Table 284-0003



Employer Survey

The purpose of the quarterly survey is to gather information from Calgary and area employers on their recruitment and retention practices and various other employment issues they are facing. Over the course of the year, employers will be divided into four categories based on the number of employees in the company and results of the survey will be reported on as follows:

✓ Q1 2015: Large-sized companies with 100+ employees

✓ Q2 2015: Medium-sized companies with 50 – 99 employees

✓ Q3 2015: Small-sized companies with 10 – 49 employees

✓ Q4 2015: Micro-sized companies with <10 employees

Survey ProfileThe 201 micro-sized employers surveyed employ approximately 914 people. Of this total, 89 per cent are full-time employees, 4 per cent are part-time employees, and 7 per cent are either contract, seasonal, casual, temporary or relief staff.

How many people does your company employ in the Calgary region?

”Other” represents companies in any of the following industries: agriculture, utilities, information & culture,management of companies, administrative & support services, educational services, other services or public administration.

Industry Total Employees

Number of Companies

Mining & Oil & Gas 85 20Construction 79 20Manufacturing 107 20Wholesale & Retail Trade 117 21Transportation & Warehousing 79 20Professional, Scientific & Technical Services 87 20Health Care & Social Assistance 92 20Accommodation & Food Services/Arts & Entertainment 90 20Finance, Insurance, Real Estate & Leasing 97 20Other 81 20Total 914 201


EMPLOYER SURVEYQ4 2015 Survey Results: Micro-sized employers with <10 employees

65

Business ActivityOn balance, 4 per cent of the employers said their company expanded in the past 12 months.Eighteen per cent of the employers surveyed in Q4 2015 said their company expanded in the 12 months prior to their survey and 14 per cent reported their company downsized, resulting in a positive balance of 4 per cent.137 In Q4 2014, 16 per cent of the employers reported they expanded and 9 per cent said they downsized, for a positive balance of 7 per cent.

On balance, one-quarter of the finance, insurance, real estate and leasing employers, 20 per cent of the ‘other’ employers and 15 per cent of the accommodation and food services/arts and entertainment employers expanded in the last year. In contrast, 10 per cent of the construction and transportation and warehousing employers and 5 per cent of the mining and oil and gas employers reported they downsized.Past Business ActivityPercentage of companies that expanded or downsized in the 12 months prior to their survey

Expanded Downsized Balance Expanded Downsized BalanceOverall Results 16% 9% 7% 18% 14% 4%

Results by IndustryMining & Oil & Gas 5% 5% 0% 10% 15% -5%Construction 15% 5% 10% 5% 15% -10%Manufacturing 10% 5% 5% 20% 25% -5%Wholesale & Retail Trade 15% 5% 10% 19% 19% 0%Transportation & Warehousing 20% 5% 15% 5% 15% -10%Professional, Scientific & Technical Services 20% 10% 10% 30% 25% 5%Health Care & Social Assistance 5% 15% -10% 20% 10% 10%Accommodation & Food Services/Arts & Entertainment 10% 20% -10% 20% 5% 15%Finance, Insurance, Real Estate & Leasing 35% 10% 25% 25% 0% 25%Other 25% 5% 20% 30% 10% 20%

Q4 2014 Q4 2015

Comments‣ “Business is very bad. It's not busy in the motel. We hired two times in the past year, but had to

layoff both ladies due to lack of work for them.” - Accommodation & Food Services/Arts & Entertainment

‣ “We can’t expand because it’s hard to keep employees.” - Accommodation & Food Services/Arts & Entertainment

‣ “We have stayed the same so far, but I expect I will need to downsize soon.” - Construction

7%#4%#

%15%#

%10%#

%5%#

0%#

5%#

10%#

15%#

20%#

Q4#2014# Q4#2015#

Has$your$company$expanded$or$downsized$$in$the$last$12$months?$

Expanded# Downsized# Balance#


137 Percentage of companies reporting an expansion minus percentage of companies reporting a downsize.

66 EMPLOYER SURVEY

‣ “We've expanded in terms of clients, but not in terms of employees.” - Health Care & Social Assistance

‣ “We've expanded, but not in the Calgary region.” - Professional, Scientific & Technical Services

‣ “We're in the middle of expanding.” - Wholesale & Retail Trade

On balance, 5 per cent of the employers anticipate a business expansion in the next 12 months, down significantly from 21 per cent in Q4 2014.Sixteen per cent of the employers anticipate their company will expand in the 12 months following their survey and 11 per cent anticipate their company will downsize, for a positive balance of 5 per cent.138 In Q4 2014, 24 per cent anticipated an expansion and 3 per cent anticipated a downsize, for a positive balance of 21 per cent.

On balance, 20 per cent of the accommodation and food services/arts and entertainment employers and 15 per cent of the professional, scientific and technical services employers anticipate a business expansion over the next year. In contrast, 15 per cent of the ‘other’ employers and 10 per cent of the mining and oil and gas employers anticipate a business downsize.Future Business ActivityPercentage of companies that anticipate an expansion or downsize in the 12 months following their survey

Expansion Downsize Balance Expansion Downsize BalanceOverall Results 24% 3% 21% 16% 11% 5%

Results by IndustryMining & Oil & Gas 15% 5% 10% 5% 15% -10%Construction 25% 5% 20% 10% 5% 5%Manufacturing 20% 0% 20% 30% 20% 10%Wholesale & Retail Trade 25% 0% 25% 19% 10% 10%Transportation & Warehousing 35% 0% 35% 10% 0% 10%Professional, Scientific & Technical Services 25% 10% 15% 30% 15% 15%Health Care & Social Assistance 15% 0% 15% 5% 5% 0%Accommodation & Food Services/Arts & Entertainment 20% 5% 15% 25% 5% 20%Finance, Insurance, Real Estate & Leasing 35% 5% 30% 20% 15% 5%Other 25% 0% 25% 10% 25% -15%

Q4 2014 Q4 2015

Comments‣ “That depends on building starts. The projections aren't really clear right now. I don't think anyone

knows what to predict.” - Construction

21%$

5%$

&15%$&10%$&5%$0%$5%$10%$15%$20%$25%$30%$

Q4$2014$ Q4$2015$

Do#you#an(cipate#a#business#expansion#or#downsize#in#the#next#12#months?#

Expansion$ Downsize$ Balance$


138 Percentage of companies anticipating a business expansion minus percentage of companies anticipating a business downsize.

67 EMPLOYER SURVEY

‣ “I'm a really small business. In fact, I'm going to be going out of business soon.” - Finance, Insurance, Real Estate & Leasing

‣ “That depends on the new government in Alberta. If taxes go up, we will be downsizing.” - Finance, Insurance, Real Estate & Leasing

‣ “We are busy but we will not expand because we can manage with the staff we have.” - Manufacturing

‣ “That's hard to say one way or another. Our Calgary office is potentially moving to Vancouver.” - Mining & Oil & Gas

‣ “No, we won't be expanding in this kind of economy.” - Mining & Oil & Gas

‣ “I am in the process of retiring and we are winding the company down.” - Mining & Oil & Gas

‣ “We are pretty much liquidated and are just contracted out for some work.” - Other

‣ “We will probably downsize. Since the election, business has gone down.” - Other

‣ “I expect to cautiously expand.” - Professional, Scientific & Technical Services

‣ “Our volumes haven't increased or decreased and I consider that fortunate because we have seen other courier businesses contract. We have several clients that are food-related deliveries and that part of our business hasn't diminished because people will always need food. However, spread over all of our 1200 clients, we have noticed through our receivables that many companies have let their people go and the amount that they need us is reduced.” - Transportation & Warehousing

Employment: Past Layoffs, Vacant Positions and Future EmploymentEleven per cent of the employers laid off workers in the three months prior to their survey.Eleven per cent of the employers reported they laid off workers in the three months prior to their survey (for reasons other than seasonality). This was up slightly from 9 per cent of the employers in the fourth quarter of 2014, and was led by manufacturing (25 per cent), wholesale and retail trade (19 per cent), accommodation and food services/arts and entertainment (15 per cent) and professional, scientific and technical services (15 per cent).

Overall, employers reported about 67 people were laid off, representing a layoff rate of 7.3 per cent. The construction industry had the highest layoff rate at 15.2 per cent, followed by manufacturing (11.2 per cent), professional, scientific and technical services (10.3 per cent) and accommodation and food services/arts and entertainment (10 per cent). The health care and social

5%#5%#5%#5%#

10%#10%#

15%#15%#

19%#25%#

11%#

0%# 10%# 20%# 30%#

Construc1on#Other#

Health#Care#&#Social#Assistance#Fin.,#Insur.,#Real#Est.#&#Leasing#

Mining#&#Oil#&#Gas#Transporta1on#&#Warehousing#Professional,#Scien1fic#&#Tech.#Accomm.#&#Food/Arts#&#Ent.#

Wholesale#&#Retail#Trade#Manufacturing#

Overall#

Percentage)of)companies)that)laid)off)employees)in)the)three)months)prior)to)survey)

Q4#2015# Q4#2014#


68 EMPLOYER SURVEY

assistance and ‘other’ industries had the lowest layoff rate at around 1.0 per cent. Additional details on layoffs can be found in Appendix B.

Number of Layoffs and Layoff Rates (in the three months prior to survey)

Comments

‣ “Yes, I've had to lay everyone off.” - Manufacturing

‣ “There were 100 layoffs announced company wide, but none of those are in Calgary.” - Manufacturing

‣ “I used to have six employees, but now I have none.” - Professional, Scientific & Technical Services

‣ “No layoffs in the past three months, but we have had layoffs in the past year.” - Transportation & Warehousing

Thirteen per cent of the employers had a total of 51 vacant positions that needed to be filled.Overall, 13 per cent of the employers reported they had vacant positions that needed to be filled at the time of their survey, down from 21 per cent in the fourth quarter of 2014. Thirty per cent of the finance, insurance, real estate and leasing employers and one-quarter of the accommodation and food services/arts and entertainment employers had vacant positions, compared to only 5 per cent of the mining and oil and gas and health care and social assistance employers and none of the construction employers.

IndustryTotal

LayoffsConstruction 0Manufacturing 2Wholesale & Retail Trade 0Professional, Scientific & Technical Services 3Accommodation & Food Services/Arts & Entertainment 6Mining & Oil & Gas 2Finance, Insurance, Real Estate & Leasing 3Transportation & Warehousing 1Other 2Health Care & Social Assistance 3Total 22Layoff rate is the number of layoffs as a percent of total employment.

Q4 2014

Layoff Rate

Total Layoffs

0.0% 121.7% 120.0% 103.0% 96.3% 92.2% 63.1% 41.1% 31.6% 13.4% 12.2% 67

Layoff rate is the number of layoffs as a percent of total employment.

Q4 2014 Q4 2015

Layoff Rate

15.2%11.2%8.5%

10.3%10.0%7.1%4.1%3.8%1.2%1.1%7.3%

Q4 2015

0%#5%#5%#

10%#10%#

15%#15%#

19%#25%#

30%#13%#

0%# 5%# 10%# 15%# 20%# 25%# 30%# 35%# 40%# 45%#

Construc2on#Health#Care#&#Social#Assistance#

Mining#&#Oil#&#Gas#Manufacturing#

Professional,#Scien2fic#&#Tech.#Transporta2on#&#Warehousing#

Other#Wholesale#&#Retail#Trade#

Accomm.#&#Food/Arts#&#Ent.#Fin.,#Insur.,#Real#Est.#&#Leasing#

Overall#

Percentage)of)companies)with)vacant)posi3ons)that)needed)to)be)filled)at)3me)of)survey)

Q4#2015# Q4#2014#


69 EMPLOYER SURVEY

Employers reported they had 51 vacancies that need to be filled. Vacancy rates ranged from a high of 12.6 per cent in the finance, insurance, real estate and leasing industry to a low of 1.2 per cent or less in the mining and oil and gas, health care and social assistance and construction industries. Additional details on vacant positions can be found in Appendix B.

Number of Vacant Positions and Vacancy Rates

On balance, 4 per cent of the employers anticipate employment in their company will increase over the next three months.Once any current vacant positions are filled, 9 per cent of the employers anticipate employment in their company will increase over the next three months, 5 per cent anticipate employment will decrease, and 86 per cent anticipate employment will stay the same, for a positive balance of 4 per cent.139 This is down from the Q4 2014 results when 11 per cent of the employers on balance anticipated employment would increase.

Employers from the finance, insurance, real estate and leasing industry are the most positive about future employment levels. On balance, 15 per cent of the employers in this industry anticipate an increase in employment in the next three months. In addition, 10 per cent of the manufacturing, wholesale/retail trade and health care and social assistance employers on balance anticipate an increase in employment. In contrast, 15 per cent of the mining and oil and gas employers and 5 per cent of the construction and professional, scientific and technical services employers on balance anticipate employment will decrease over the next three months.

Industry # of Vacant Positions

Finance, Insurance, Real Estate & Leasing 1Accommodation & Food Services/Arts & Entertainment 8Transportation & Warehousing 8Wholesale & Retail Trade 5Professional, Scientific & Technical Services 6Other 19Manufacturing 5Mining & Oil & Gas 8Health Care & Social Assistance 2Construction 13Total 75 Vacancy rate is the number of vacant positions divided by all positions (vacant plus occupied)

Q4 2014Vacancy

Rate# of Vacant Positions

0.8% 148.6% 128.3% 75.0% 56.5% 4

21.6% 44.8% 38.2% 12.0% 1

10.7% 07.4% 51

Vacancy rate is the number of vacant positions divided by all positions (vacant plus occupied)

Q4 2014 Q4 2015Vacancy

Rate

12.6%11.8%8.1%4.1%4.4%4.7%2.7%1.2%1.1%0.0%5.3%

Q4 2015

11%#

4%#

%10%#

%5%#

0%#

5%#

10%#

15%#

20%#

Q4#2014# Q4#2015#

Do#you#an(cipate#employment#will#increase,##decrease#or#stay#the#same#in#the#next#3#months?#

Increase# Decrease# Balance#


139 Percentage of employers that anticipate employment in their company will increase in the next three months minus the percentage of employers that anticipate employment will decrease.

70 EMPLOYER SURVEY

Future EmploymentPercentage of companies that anticipated an increase or decrease in total employment in the 3 months following their survey

Increase Decrease Balance Increase Decrease BalanceOverall Results 15% 4% 11% 9% 5% 4%

Results by IndustryMining & Oil & Gas 10% 10% 0% 5% 20% -15%Construction 25% 0% 25% 5% 10% -5%Manufacturing 10% 0% 10% 10% 0% 10%Wholesale & Retail Trade 15% 5% 10% 14% 5% 10%Transportation & Warehousing 15% 5% 10% 5% 0% 5%Professional, Scientific & Technical Services 20% 0% 20% 0% 5% -5%Health Care & Social Assistance 15% 0% 15% 10% 0% 10%Accommodation & Food Services/Arts & Entertainment 5% 15% -10% 5% 0% 5%Finance, Insurance, Real Estate & Leasing 5% 0% 5% 20% 5% 15%Other 25% 0% 25% 15% 10% 5%

Q4 2014 Q4 2015

Overall, in the three months following their survey, employers anticipate employment will increase by 25 and decrease by 26, for a net employment decrease of 1 person. Micro-sized mining and oil and gas employers anticipate a net decrease of about 13 people.

Comments‣ “I think we were a little bit too drastic in our layoffs, so we will likely hire two people.” - Finance,

Insurance, Real Estate & Leasing

‣ “We're keeping postings out for graphic designers and trying to be proactive. However, we don't necessarily need someone.” - Manufacturing

‣ “We expect to close the company soon. With the oil prices low and the lack of industry work, I have decided to retire after 40 years.” - Mining & Oil & Gas

‣ “There's nobody hiring in the oil patch right now.” - Mining & Oil & Gas

‣ “We could use another employee, but we can't afford to pay them.” - Professional, Scientific & Technical Services

Industry Increase #

Decrease # Net #

Manufacturing 7 0 7Finance, Insurance, Real Estate & Leasing 4 1 3Health Care & Social Assistance 2 0 2Transportation & Warehousing 2 0 2Accommodation & Food Services/Arts & Entertainment 1 0 1Other 4 3 1Construction 1 2 -1Wholesale & Retail Trade 3 4 -1Professional, Scientific & Technical Services 0 2 -2Mining & Oil & Gas 1 14 -13Total 25 26 -1

Anticipated change in employment over the next three months


71 EMPLOYER SURVEY

‣ “We will be decreasing by hours, but not people. We're trying not to layoff any more of our employees.” - Professional, Scientific & Technical Services

Recruitment ResourcesEighty-two per cent of the employers use word of mouth/employee referrals to find applicants. Employers were asked to identify all the resources they use to find applicants. The top resources employers use are word of mouth/employee referrals (82 per cent), career and classified websites (41 per cent), walk-ins/unsolicited resumes (38 per cent) and company website/internal postings (25 per cent). About one-fifth of the employers said they use social media as a resource, up from 15 per cent in the fourth quarter of 2014. Seven per cent of the employers mentioned they use Alberta Works/employment resource centres.

Word of mouth/employee referrals was by far the most successful resource over the last 12 months.Employers were then asked to specify the resource that was the most successful over the last 12 months. Of all the resources mentioned, word of mouth/employee referrals was the most successful, reported by 58 per cent of the employers. Career and classified websites was a distant second, mentioned by 16 per cent of the employers. While one-quarter of the employers reported they use company website/internals postings as a resource to find applicants, only 3 per cent said it was the most successful over the last year.Comments‣ “Our sign in the post office is the most effective recruitment resource.” - Accommodation & Food

Services/Arts & Entertainment

‣ “I don't think any of them are overly successful to be honest.” - Accommodation & Food Services/Arts & Entertainment

2%#3%#4%#5%#6%#7%#8%#12%#14%#19%#21%#25%#

38%#41%#

82%#

0%# 20%# 40%# 60%# 80%# 100%#

High#schools#Other#

Technical/trade#ins>tutes#Job#fairs#Signage#

Alberta#Works/emp.#resource#centres#Colleges/universi>es#

Newspapers#Employment#agencies#

Social#media#Industry#associa>ons#

Company#website/internal#pos>ngs#WalkQins/unsolicited#resumes#Career#and#classified#websites#

Word#of#mouth/employees#referrals#

Resources(used(to(find(applicants(

3%#1%#1%#1%#1%#2%#3%#3%#3%#3%#4%#5%#

16%#58%#

0%# 10%# 20%# 30%# 40%# 50%# 60%#

Unsure#Alberta#Works/emp.#resource#centres#

Technical/trade#insBtutes#Job#fairs#Signage#

Colleges/universiBes#Newspapers#

Company#website/internal#posBngs#Employment#agencies#

Social#media#Industry#associaBons#

WalkNins/unsolicited#resumes#Career#and#classified#websites#

Word#of#mouth/employees#referrals#

Most%successful%resource%over%last%12%months%


72 EMPLOYER SURVEY

‣ “People usually just show up or email us to express their interest. We have almost the same number of people asking us for a job as we have customers.” - Accommodation & Food Services/Arts & Entertainment

‣ “The best recruitment resource would definitely be the online sites like job bank and kijiji.” - Construction

‣ “Literally everybody who works here right now is somebody a current employee previously worked with at another company.” - Finance, Insurance, Real Estate & Leasing

‣ “We just take on practicum students.” - Health Care & Social Assistance

‣ “The most effective resource is job bank. We also take on work experience and RAP students.” - Manufacturing

‣ “The trade schools are our best resource.” - Manufacturing

‣ “That depends on the role. Overall, I would say the university career fairs.” - Manufacturing

‣ “We only go through employment agencies.” - Mining & Oil & Gas

‣ “When the market was really hot a couple of years ago, we had to use a lot of recruitment resources. At this point, however, word of mouth is generally sufficient.” - Mining & Oil & Gas

‣ “Employment agencies are used only for those hard to fill jobs. I would say we probably have the most success when we're hiring new grads on the school sites and our website.” - Other

‣ “We recruit a fair bit on LinkedIn.” - Other

‣ “Word of mouth through our business colleagues, friends and networks. We refer people back and forth amongst each other.” - Professional, Scientific & Technical Services

‣ “I found our part timer as a student through a contact from the local college. That's the type of candidate we're looking to hire, so in the future we would just use the same resource.” - Professional, Scientific & Technical Services

‣ “In times like this I get a lot of good resumes and calls. When anyone inquires about employment, I tell them I don't over-hire because I won't take work away from current employees for new ones. When new work comes in then I need good people so I keep those good applications on file.” - Transportation & Warehousing

‣ “Truthfully, our best applications come from the walk ins.” - Wholesale & Retail Trade

‣ “I often just do a battery of all the resources. However, I’ve had very bad luck with the employment agencies. I like to make replacements rather quickly when I have a vacancy and move on to training.” - Wholesale & Retail Trade


73 EMPLOYER SURVEY

Recruiting DifficultiesTwenty-two per cent the employers reported having difficulty recruiting qualified employees.Overall, 22 per cent of the employers said they had difficulty recruiting qualified employees in the 12 months prior to their survey, down from 29 per cent in the fourth quarter of 2014. Forty-three per cent of the wholesale and retail trade employers had difficulty recruiting qualified employees, compared to only 5 per cent of the mining and oil and gas employers.

The 44 employers that reported having difficulty recruiting were also asked to specify the occupations that were the most difficult to fill. Cashiers was the top occupation, reported by 7 per cent of the employers, followed by accommodation service managers, graphic designers and illustrators, technical sales specialists - wholesale trade, retail salespersons, residential and commercial installers and servicers and construction trade helpers and labourers (5 per cent each).

Comments‣ “We have had a little bit of difficulty filling our summer positions.” - Accommodation & Food

Services/Arts & Entertainment

‣ “Not at all. There are a surplus of workers out there.” - Finance, Insurance, Real Estate & Leasing

‣ “My only employee has been with me for 26 years.” - Finance, Insurance, Real Estate & Leasing

‣ “We haven't changed our employment at all in 14 years.” - Health Care & Social Assistance

‣ “We have been challenged with finding qualified, skilled and talented individuals. We have the most difficulty with our skilled positions and experienced supervisory roles.” - Manufacturing

5%#10%#

15%#15%#

20%#20%#20%#

35%#35%#

43%#22%#

0%# 10%# 20%# 30%# 40%# 50%#

Mining#&#Oil#&#Gas#Other#

Health#Care#&#Social#Assistance#Fin.,#Insur.,#Real#Est.#&#Leasing#TransportaGon#&#Warehousing#Professional,#ScienGfic#&#Tech.#

ConstrucGon#Manufacturing#

Accomm.#&#Food/Arts#&#Ent.#Wholesale#&#Retail#Trade#

Overall#

Percentage)of)companies)that)had)difficulty)recrui6ng)in)the)12)months)prior)to)survey)

Q4#2015# Q4#2014#

NOC Code Occupation Employers %

6611 Cashiers 7%632 Accommodation service managers 5%5241 Graphic designers and illustrators 5%6221 Technical sales specialists - wholesale trade 5%6421 Retail salespersons 5%7441 Residential and commercial installers and servicers 5%7611 Construction trades helpers and labourers 5%

Note: 44 employers reported having difficulty recruiting qualified employees.

What occupations have been the most difficult to fill?

Only occupations with a response of 5 per cent or more are shown in the table.


74 EMPLOYER SURVEY

‣ “We're in electronic design, so it's hard to find the right people.” - Other

‣ “We’ve had difficulty recruiting for all positions. We’re a specialized archeology firm.” - Professional, Scientific & Technical Services

‣ “We've found is that the people that do apply are far too qualified for the job. People will apply with an experience level way above what we're looking for. We've had certified engineers apply to be a labourer and we have to tell them that we can't employ them because we have no suitable job for them.” - Professional, Scientific & Technical Services

‣ “We’ve definitely had difficulty recruiting qualified employees and it’s for all positions.” - Transportation & Warehousing

‣ “We’ve had difficulty finding someone for an entry level position with enough skills to do the job.” - Transportation & Warehousing

‣ “That's a tough question. The nature of Banff is transient. It can be easier to find people willing to work entry level jobs in a resort town than it can be to find permanent management staff.” - Wholesale & Retail Trade

‣ “We have a terrible time in our industry because no one is going into it anymore. We have ads running all the time for technicians. Our current position has been open for three months.” - Wholesale & Retail Trade

‣ “We have had a little bit of difficulty despite all the layoffs in the oil patch. You would think we would get more resumes dropped off but I haven't seen one.” - Wholesale & Retail Trade

Employers have responded to the difficulty finding qualified employees in a variety of ways. Of the 44 employers that reported having difficulty recruiting qualified employees, 61 per cent increased recruiting efforts, 48 per cent did not fill the job opening and 43 per cent increased the workload for current workers. Seven per cent of the 44 employers applied for or hired temporary foreign workers.

Response to hiring difficulties Employers %

Increased recruiting efforts 61%Did not fill the job opening 48%Increased workload for current workers 43%Increased investment in training provided by in-house staff 41%Hired a less qualified applicant 30%Hired contingent workers, including temps, contractors and freelancers 27%Redeployed employees to new roles where their skills were more needed 16%Targeted underutilized or new talent pools * 16%Increased wages/benefits to attract more applicants 14%Increased investment in training provided by a third-party 11%Outsourced the work 7%Applied for/hired temporary foreign workers 7%Partnered with educational institutions to ensure programs develop candidates with the right skills 5%Started actively hiring out of province/country 2%Redesigned the job to change the required skills 2%Applied for a Canada-Alberta Job Grant 2%Nothing 7%Note: 44 employers reported having difficulty recruiting qualified employees.* Mature workers, stay at home parents, persons with disabilities, Aboriginal peoples, etc.

How has your company responded to the difficulty recruiting qualified employees?


75 EMPLOYER SURVEY

Comments‣ “We just couldn't find the proper person. We had people who lied about their experience. None of the

people who applied actually had management skills.” - Accommodation & Food Services/Arts & Entertainment

‣ “We ended up hiring two people for one job. They worked on contract. This year we decided to hire them both permanently.” - Accommodation & Food Services/Arts & Entertainment

‣ “We've really ramped up our training. In the service construction industry we're in, a lot of people seem good when we hire them and so we spend the time training them. However, they're used to making $100,000 a year in the oil and gas industry and what we pay isn't enough for them. We're looking to find more ways to give bonuses and greater wages, but based on our industry we can only do so much.” - Construction

‣ “We will be staying the way we are if I can't find the right person or sub-contractor. I'm not in a rush and I'm not wasting money to advertise.” - Finance, Insurance, Real Estate & Leasing

‣ “We hired someone who was less qualified and trained them up to where we needed them.” - Finance, Insurance, Real Estate & Leasing

‣ “We have offered more contract positions.” - Health Care & Social Assistance

‣ “There's not a lot we can do. In this town there's not enough housing and it's too expensive for most people to work in for what they can earn.” - Manufacturing

‣ “We just used different avenues for recruiting. Instead of Kijiji we have used some other paid sites.” - Manufacturing

‣ “I think like many companies we have had to become more focused, strategic and tactical in recruiting. We have to employ dedicated resources. Our budget for training and development of staff has increased. Externally there are some service providers that assist us in training, but we also do our own internally.” - Manufacturing

‣ “Basically we have been hiring and training people who had some basic skills.” - Mining & Oil & Gas

‣ “The partners work later at night because we haven’t found a suitable person to fill the position.” - Professional, Scientific & Technical Services

‣ “We really focus on promoting from within and encouraging internal relocation where the new opportunities are. However, when we're looking for management sometimes finding the right employee creates a situation if someone isn't applying from within.” - Wholesale & Retail Trade

‣ “What we're doing isn't working. We have lots and lots of contacts in our industry and our boss is constantly asking them if they know of anyone looking for work.” - Wholesale & Retail Trade


76 EMPLOYER SURVEY

On balance, 17 per cent of the employers anticipate they will have less difficulty recruiting qualified employees over the next 12 months.Three per cent of the employers anticipate they will have more difficulty recruiting qualified employees in the 12 months following their survey, 20 per cent anticipate they will have less difficulty and 77 per cent anticipate they will have about the same difficulty, for a balance of -17 per cent.140

In Q4 2014, 3 per cent of the employers on balance anticipated they would have more difficulty recruiting qualified employees.

On balance, employers in all the industries anticipate they will have less difficulty recruiting in the next 12 months, led by mining and oil and gas and finance, insurance, real estate and leasing (-30 per cent).Future Recruiting DifficultiesPercentage of companies that anticipated having more or less difficulty recruiting qualified employees in the 12 months following their survey

More Less Balance More Less BalanceOverall Results 10% 7% 3% 3% 20% -17%

Results by IndustryMining & Oil & Gas 10% 5% 5% 0% 30% -30%Construction 15% 15% 0% 5% 20% -15%Manufacturing 5% 5% 0% 10% 25% -15%Wholesale & Retail Trade 15% 10% 5% 5% 19% -14%Transportation & Warehousing 10% 10% 0% 0% 15% -15%Professional, Scientific & Technical Services 10% 0% 10% 0% 15% -15%Health Care & Social Assistance 0% 5% -5% 5% 20% -15%Accommodation & Food Services/Arts & Entertainment 20% 0% 20% 5% 10% -5%Finance, Insurance, Real Estate & Leasing 5% 5% 0% 0% 30% -30%Other 10% 10% 0% 5% 15% -10%

Q4 2014 Q4 2015

Comments‣ “I think it will get a little bit easier. Unfortunately more people are laid off and looking for work in

our industry.” - Construction

‣ “I think it will get easier because a lot of people are being laid off in oil and gas, especially here in Alberta where the headquarters of many oil and gas companies are located.” - Finance, Insurance, Real Estate & Leasing

‣ “I expect it will be easier than ever.” - Health Care & Social Assistance

3%#

$17%#

$25%#$20%#$15%#$10%#$5%#0%#5%#

10%#15%#

Q4#2014# Q4#2015#

Do#you#an(cipate#having#more,#less#or#the#same#difficulty#recrui(ng#qualified#employees#in#the#

next#12#months?#More# Less# Balance#


140 Percentage of employers that anticipate having more difficulty recruiting qualified employees in the 12 months following their survey minus the percentage of employers that anticipate having less difficulty.

77 EMPLOYER SURVEY

‣ “I think the job market will be tighter for the type of people that we're looking for.” - Manufacturing

‣ “We will have less difficulty recruiting because it seems like the work is drying up in Alberta.” - Mining & Oil & Gas

‣ “We will have less difficulty recruiting because there are so many people out there. However, in some ways you don't know how well you will be able to retain qualified people long term. A warehouse employee or a welder can always go somewhere else that pays more when the market improves.” - Wholesale & Retail Trade

‣ “In our industry, I imagine there's 100 jobs available but only 70 people qualified for those jobs. There's a lot of competition and job hopping going on.” - Wholesale & Retail Trade

‣ “I expect way less difficulty. Right now, we have 10 people a day coming in asking for a job.” - Wholesale & Retail Trade

Employee TurnoverTwenty-nine per cent of the employers reported employees had voluntarily left their company in the prior year.Overall, 29 per cent of the employers reported employees had left their company in the 12 months prior to their survey as a result of voluntary turnover,141 down significantly from 41 per cent in Q4 2014.

Over 60 per cent of the wholesale and retail trade employers, 45 per cent of the construction employers and 40 per cent of the accommodation and food services/arts and entertainment employers said employees had voluntarily left in the prior year. In comparison, only 15 per cent of the finance, insurance, real estate and leasing and mining and oil and gas employers and 10 per cent of the ‘other’ employers reported voluntary turnover.

Overall, the turnover rate was 15 per cent.Employers reported approximately 135 employees left their companies in the 12 months prior to their survey as a result of voluntary turnover. This equates to a turnover rate142 of 15 per cent, down from 19 per cent in Q4 2014.

10%$15%$15%$

20%$20%$

25%$35%$

40%$45%$

62%$29%$

0%$ 10%$ 20%$ 30%$ 40%$ 50%$ 60%$ 70%$

Other$Mining$&$Oil$&$Gas$

Fin.,$Insur.,$Real$Est.$&$Leasing$Health$Care$&$Social$Assistance$Professional,$ScienJfic$&$Tech.$TransportaJon$&$Warehousing$

Manufacturing$Accomm.$&$Food/Arts$&$Ent.$

ConstrucJon$Wholesale$&$Retail$Trade$

Overall$

Percentage)of)companies)with)voluntary)turnover)in)the)12)months)prior)to)survey)

Q4$2015$ Q4$2014$


141 Initiated by the employee, not including retirement or maternity leave.

142 Total turnover divided by total employees.

78 EMPLOYER SURVEY

The accommodation and food services/arts and entertainment industry had the highest turnover rate on average at 31 per cent, up from 11 per cent the previous year. In contrast, the ‘other’ (6 per cent) and finance, insurance, real estate and leasing industries (5 per cent) had the lowest employee turnover rates in the fourth quarter of 2015.

Employers were also asked to specify the occupations that experienced the most voluntary turnover. Retail salespersons and cashiers (9 per cent each) and construction trades helpers and labourers (7 per cent) were the top occupations mentioned by employers.

Comments‣ “Our turnover rate is easily over 100%.” - Accommodation & Food Services/Arts & Entertainment

‣ “I would say turnover is at about 40%.” - Accommodation & Food Services/Arts & Entertainment

‣ “For the last 10 to 15 years it's been the same two people working here.” - Health Care & Social Assistance

‣ “Staff leave all the time. However, in the last two years we have kept the majority of staff.” - Wholesale & Retail Trade

‣ “One of our techs left for six months, but we're keeping his tools and job open for him if he decides to come back.” - Wholesale & Retail Trade

5%#6%#7%#7%#

12%#13%#

20%#22%#22%#

31%#15%#

0%# 10%# 20%# 30%# 40%# 50%# 60%# 70%#

Fin.,#Insur.,#Real#Est.#&#Leasing#Other#

Health#Care#&#Social#Assistance#Professional,#ScienGfic#&#Tech.#

Mining#&#Oil#&#Gas#Manufacturing#ConstrucGon#

TransportaGon#&#Warehousing#Wholesale#&#Retail#Trade#

Accomm.#&#Food/Arts#&#Ent.#Overall#

Employee(turnover(rates(Q4#2015# Q4#2014#

NOC Code Occupation Employers %

6421 Retail salespersons 9%6611 Cashiers 9%7611 Construction trades helpers and labourers 7%1221 Administrative officers 5%6221 Technical sales specialists - wholesale trade 5%6731 Light duty cleaners 5%7237 Welders and related machine operators 3%7271 Carpenters 3%7322 Motor vehicle body repairers 3%7441 Residential and commercial installers and servicers 3%7511 Truck drivers 3%8612 Landscaping and grounds maintenance labourers 3%

Only occupations with a response of 3 per cent or more are shown in the table.

What occupations have experienced the most voluntary turnover?

Note: 58 employers reported employees had left their company in the previous 12 months as a result of voluntary turnover.


79 EMPLOYER SURVEY

On balance, 8 per cent of the employers anticipate employee turnover will be lower over the next year.Four per cent of the employers anticipate voluntary employee turnover will be higher in the 12 months following their survey and 12 per cent anticipate it will be lower, for a balance of 8 per cent anticipating turnover will be lower.143 In Q4 2014, 8 per cent of the employers on balance also anticipated turnover would be lower in the year following their survey.

Twenty per cent of the finance, insurance, real estate and leasing employers and 15 per cent of the health care and social assistance and accommodation and food services/arts and entertainment employers on balance anticipate employee turnover in their companies will be lower in the next year. Mining and oil and gas and wholesale and retail trade employers were neutral on balance.Future TurnoverPercentage of companies that anticipated employee turnover would be higher or lower in the 12 months following their survey

Higher Lower Balance Higher Lower BalanceOverall Results 4% 12% -8% 4% 12% -8%

Results by IndustryMining & Oil & Gas 5% 5% 0% 5% 5% 0%Construction 0% 5% -5% 0% 5% -5%Manufacturing 0% 20% -20% 15% 20% -5%Wholesale & Retail Trade 10% 10% 0% 10% 10% 0%Transportation & Warehousing 5% 15% -10% 0% 5% -5%Professional, Scientific & Technical Services 0% 15% -15% 5% 15% -10%Health Care & Social Assistance 0% 20% -20% 0% 15% -15%Accommodation & Food Services/Arts & Entertainment 5% 5% 0% 5% 20% -15%Finance, Insurance, Real Estate & Leasing 5% 15% -10% 0% 20% -20%Other 10% 10% 0% 5% 10% -5%

Q4 2014 Q4 2015

Comments‣ “I don't really have turnover. One person has been here 10 years and two have been here over five

years.” - Transportation & Warehousing

‣ “I have no idea. That depends on what the government does to respond to the economic times.” - Wholesale & Retail Trade

!8%$ !8%$

!15%$

!10%$

!5%$

0%$

5%$

10%$

Q4$2014$ Q4$2015$

Do#you#an(cipate#employee#turnover#will#be#higher#or#lower#in#the#next#12#months?#

Higher$ Lower$ Balance$


143 Percentage of employers that anticipated voluntary turnover would be higher in the 12 months following their survey minus the percentage of employers that anticipated voluntary turnover would be lower.

80 EMPLOYER SURVEY

RetentionThe top successful retention strategy over the last 12 months was providing a positive work environment.Employers were asked to indicate an employee retention strategy that was the most successful over the last 12 months. The top successful strategies were providing a positive work environment (13 per cent), excellent management/supervision (12 per cent) and interesting/challenging work (12 per cent). Eighteen per cent of the employers said nothing was successful in retaining employees and 7 per cent were unsure. Comments‣ “I'd say as a family run business it's more

personal and the work environment is different from larger hotels.” - Accommodation & Food Services/Arts & Entertainment

‣ “Almost all of us are new within the last two years. I think, although it may sound cliché, that it's about treating employees really well.” - Accommodation & Food Services/Arts & Entertainment

‣ “It's the way we're organized. We're a small company, so we can be very lenient and understanding about time off and things like that.” - Accommodation & Food Services/Arts & Entertainment

‣ “It's a museum. That's where the people here are qualified to work and there aren't many other jobs for them.” - Accommodation & Food Services/Arts & Entertainment

‣ “Proper management is the key to retention.” - Accommodation & Food Services/Arts & Entertainment

‣ “Feeling valued.” - Construction

‣ “Good friendly work environment.” - Construction

‣ “The amount of hours they get during the summer and they like to travel in the winter.” - Construction

‣ “I think probably just being open to giving time off with pay, especially for family oriented reasons.” - Construction

‣ “There are lots of things. Engagement is probably number one. We work to keep our employees engaged in their jobs. We encourage learning and work with them to better themselves professionally.” - Finance, Insurance, Real Estate & Leasing

‣ “Anybody who comes to work here does so because we're a charitable organization working for people that are in need. That's true of practicum students too.” - Health Care & Social Assistance

18%$7%$

1%$1%$1%$1%$1%$2%$2%$2%$2%$

6%$9%$10%$

12%$12%$13%$

0%$ 5%$ 10%$ 15%$ 20%$

Nothing$Unsure$Other$

Employee$engagement$Excellent$communicaAon$

Learning/growth$opportuniAes$Excellent$coworkers$

Company$culture$Cash$bonuses$

Perks$CompeAAve$benefits$package$

Job$security$Flexible$work$measures$

CompeAAve$salary$InteresAng/challenging$work$

Excellent$management/supervision$PosiAve$work$environment$

Most%successful%employee%reten0on%strategy%


81 EMPLOYER SURVEY

‣ “I would say it's that we have a very inclusive team and atmosphere in the office. We have people from all over the world working here, including people from different religions and abilities. People feel respected here.” - Health Care & Social Assistance

‣ “The flexibility in work days.” - Manufacturing

‣ “We treat everybody as partners by keeping them informed and we offer good training.” - Manufacturing

‣ “I would say building on our respectful workplace. A healthy, safe workplace that reinforces respect is a key focus area and reinforces our retention. How we treat people is a top priority.” - Manufacturing

‣ “We have the world's best bosses.” - Mining & Oil & Gas

‣ “Calgary is such a small office that I don't know why they stay. We don't have any problems with retention there. I would say the interest in the business keeps people working here. We're in the satellite industry, so they are interested in the uniqueness of business.” - Other

‣ “We offer our employees unlimited vacation.” - Other

‣ “It's a good place to work that's lively and easy going.” - Professional, Scientific & Technical Services

‣ “I think that it's the perks, but not monetary things. The perks that breed retention are flex hours and time off.” - Professional, Scientific & Technical Services

‣ “It's just that we're small and friendly and easy to work for. There's no long hours or multiple bosses here.” - Professional, Scientific & Technical Services

‣ “That's a hard question for the boss to answer. I'd like to think it's me, but I don't think it is. Good work atmosphere is the most likely reason people stay.” - Transportation & Warehousing

‣ “The same strategy for recruitment works for retention. I hire people because I have enough business and therefore enough work for them to do. They appreciate that job security.” - Transportation & Warehousing

‣ “I think long term retention is about cross-training and cross-promotion. It's about making sure the employees know the mission statement and plans for company expansion. It's about really making sure employees know about the ideals of the company and training opportunities available to them. In the retail industry you can compete on price, but what separates us apart is our people. If they're engaged and happy then they're going to stay. Some managers don't get that and they wonder why they have high turnover. We can't control the cost of living, transient nature and small town atmosphere of Banff, but we can work towards employee engagement.” - Wholesale & Retail Trade

‣ “It helps if they like the job, but in the end it's always about money.” - Wholesale & Retail Trade


82 EMPLOYER SURVEY

Two per cent of the employers anticipate they will be focusing more on employee retention over the next year.Six per cent of the employers anticipate they will be focusing more on employee retention over the next year, 4 per cent anticipate they will be focusing less and 90 per cent anticipate they will be focusing about the same, for a positive balance of 2 per cent.144 This is down significantly from the fourth quarter of 2014 when 15 per cent of the employers said they would be focusing more on employee retention. Fifteen per cent of the manufacturing employers and 10 per cent of the transportation and warehousing, health care and social assistance and finance, insurance, real estate and leasing employers anticipate they will be focusing more on employee retention over the next year. Fifteen per cent of the mining and oil and gas employers on balance anticipate they will be focusing less on employee retention.Future RetentionPercentage of companies that anticipated they would be focusing more or less on employee retentionin the 12 months following their survey

More Less Balance More Less BalanceOverall Results 17% 2% 15% 6% 4% 2%

Results by IndustryMining & Oil & Gas 10% 10% 0% 0% 15% -15%Construction 25% 0% 25% 5% 0% 5%Manufacturing 20% 0% 20% 25% 10% 15%Wholesale & Retail Trade 25% 0% 25% 0% 5% -5%Transportation & Warehousing 15% 0% 15% 10% 0% 10%Professional, Scientific & Technical Services 15% 0% 15% 0% 5% -5%Health Care & Social Assistance 10% 0% 10% 10% 0% 10%Accommodation & Food Services/Arts & Entertainment 15% 0% 15% 0% 0% 0%Finance, Insurance, Real Estate & Leasing 10% 0% 10% 15% 5% 10%Other 25% 5% 20% 0% 0% 0%

Q4 2014 Q4 2015

Comments‣ “We've had the same people working for us for at least five years, so I think we're doing something

right.” - Accommodation & Food Services/Arts & Entertainment

‣ “It's really important for us to have the same employees season after season.” - Construction

‣ “We have other priorities at the moment.” - Health Care & Social Assistance

‣ “Everybody I have now wants their job, so I will keep doing the same things.” - Manufacturing

15%$

2%$

&5%$

0%$

5%$

10%$

15%$

20%$

Q4$2014$ Q4$2015$

Do#you#an(cipate#focusing#more,#less#or#the#same#on#employee#reten(on#in#the#next#12#months?#

More$ Less$ Balance$


144 Percentage of employers that anticipate they will be focusing more on employee retention in the 12 months following their survey minus the percentage of employers that anticipate they will be focusing less.

83 EMPLOYER SURVEY

Supplemental Questions - Focus on Employee Training and DevelopmentIn addition to the general questions about recruitment and retention practices, employers were asked the following specific questions about their training and development practices:

‣ On a scale of 1 to 5 with 1 being strongly disagree and 5 being strongly agree, please evaluate the following statement: Employee training and development is a top priority in our company.

‣ Does your company currently have a budget specifically for employee training and development? If yes, do you anticipate you will be spending more, less or the same on employee training and development in your next budget.

‣ What is the biggest challenge your company faces in terms of training employees?

‣ In terms of learning content, which of the following areas does your company either provide training or pay for training? (Employers were given a list)

Just under half of the employers agree that employee training and development is a top priority in their company.Twenty-eight per cent of the employers strongly agree that employee training and development is a top priority in their company, while 20 per cent of the employers agree. Thirteen per cent of the employers disagree that employee training and development is a top priority.

Employee training and development is a top priority in our company

Strongly)Disagree)

6%)

Disagree)7%)

Neutral)39%)

Agree)20%)

Strongly)Agree)28%)

48%)


84 EMPLOYER SURVEY

Sixty per cent of the professional, scientific and technical services employers and 58 per cent of the wholesale and retail trade employers agree that employee training and development is a top priority in their company. In contrast, only 35 per cent of the mining and oil and gas employers and 30 per cent of the ‘other’ employers agree.

About one-fifth of the employers have a budget specifically for employee training and development.Twenty-two per cent of the employers said they currently have a budget specifically for employee training and development, 76 per cent said they do not, and 2 per cent were unsure. Thirty-five per cent of the finance, insurance, real estate and leasing employers and 30 per cent of the professional, scientific and technical services and transportation and warehousing employers reported they have a budget specifically for training and development. In contrast, only 15 per cent of the construction employers and 5 per cent of the ‘other’ employers said they have a specific training and development budget.

Does your company currently have a budget specifically foremployee training and development?

20%$10%$

25%$25%$

35%$35%$35%$

45%$29%$

25%$28%$

10%$25%$

20%$25%$

15%$15%$20%$

10%$29%$35%$

20%$

0%$ 10%$ 20%$ 30%$ 40%$ 50%$ 60%$

Other$Mining$&$Oil$&$Gas$

Health$Care$&$Social$Assistance$Accomm.$&$Food/Arts$&$Ent.$

Manufacturing$TransportaJon$&$Warehousing$

ConstrucJon$Fin.,$Insur.,$Real$Est.$&$Leasing$

Wholesale$&$Retail$Trade$Professional,$ScienJfic$&$Tech.$

Overall$

Employee(training(and(development(is((a(top(priority(in(our(company(

Strongly$Agree$ Agree$

5%#15%#20%#20%#20%#20%#24%#30%#30%#35%#

22%#

0%# 20%# 40%# 60%# 80%# 100%#

Other#Construc6on#

Mining#&#Oil#&#Gas#Manufacturing#

Health#Care#&#Social#Assistance#Accomm.#&#Food/Arts#&#Ent.#

Wholesale#&#Retail#Trade#Transporta6on#&#Warehousing#Professional,#Scien6fic#&#Tech.#Fin.,#Insur.,#Real#Est.#&#Leasing#

Total#

Yes# No# Unsure#


85 EMPLOYER SURVEY

Comments‣ “If we need to spend money on training, we would. However, it's usually not necessary.” -

Accommodation & Food Services/Arts & Entertainment

‣ People who need to train come in and job shadow. That's what works for us because we're so small.” - Health Care & Social Assistance

‣ “We ensure our employees have the training that they need to do their jobs, but it's not a high priority.” - Other

‣ “Our training budget has been completely cut.” - Other

‣ “Yes, but we will be spending less on training based on the current profitability of the company.” - Professional, Scientific & Technical Services

‣ “We have three sub-committees within the larger company doing things to not only train but also modernize, make things fun and offer different rewards.” - Wholesale & Retail Trade

Sixteen per cent of the employers on balance anticipate they will be spending more on employee training and development in their next budget.Of the 44 employers that have a budget specifically for training, 27 per cent anticipate they will be spending more on employee training and development in their next budget, 11 per cent anticipate they will be spending less, and 62 per cent anticipate they will be spending about the same, for a positive balance of 16 per cent. Future Spending on Employee Training and DevelopmentPercentage of companies that anticipated they would be spending more or less on employee training and development in their next budget

More Less BalanceOverall Results 27% 11% 16%

Results by IndustryMining & Oil & Gas 0% 50% -50%Construction 0% 0% 0%Manufacturing 25% 25% 0%Wholesale & Retail Trade 20% 0% 20%Transportation & Warehousing 50% 0% 50%Professional, Scientific & Technical Services 33% 33% 0%Health Care & Social Assistance 75% 0% 75%Accommodation & Food Services/Arts & Entertainment 0% 0% 0%Finance, Insurance, Real Estate & Leasing 29% 0% 29%Other 0% 0% 0%

Q4 2015

Note: 44 employers currently have a budget specifically for employee training and development.


86 EMPLOYER SURVEY

The top challenges employers face in terms of training employee are time constraints and managing employees’ diverse learning needs.Thirteen per cent of the employers said time constraints (too busy) is the biggest challenge they face when training employees. Managing employees’ diverse learning needs is the next biggest challenge, mentioned by 12 per cent of the employers. Another 8 per cent of the employers said training is too costly or not in the budget.

Comments‣ We’re a non-profit. We don't have the ability to plan ahead because we don't know what funding is

coming up. For instance, we have two grant applications that we'll hear back about between Christmas and New Year's for our 2016 budget. The jobs will start January 1. With professional development, if the funds don't exist or aren't for sure then we can't register for courses.” - Accommodation & Food Services/Arts & Entertainment

‣ “I think the biggest challenge is that it takes two seasons for a good employee to be completely versatile. They can't learn it all in one season. Typically virtually all of the staff from the previous year returns. Some years when that doesn't happen it's a problem.” - Accommodation & Food Services/Arts & Entertainment

‣ “This is a niche industry, so they don't have the skills we need until after we hire and train them.” - Construction

‣ “Finding a good institution without having the knowledge of their training quality.” - Finance, Insurance, Real Estate & Leasing

‣ “I guess the challenge lies in the intelligence level of the employees.” - Finance, Insurance, Real Estate & Leasing

‣ “It's difficult to find the high level training courses for dental in Calgary.” - Health Care & Social Assistance

Biggest Challenge Employers %

Time constraints - too busy 13%Managing employees' diverse learning needs - knowing what training is relevant and available 12%Too costly/not in budget 8%Employees aren't interested in training 6%Finding employees to train 6%Turnover - employees leave once trained 5%The locations where employees work are not near the training 4%Lack of internal trainers to administer the training 2%The labour force is uneducated/unskilled 1%English is a second language for many of our employees - language barrier 1%The length of training that is required 1%Unsure 8%Employees don't need training - they are fully trained 15%None 18%

What is the biggest challenge your company faces in terms of training employees?


87 EMPLOYER SURVEY

‣ “The biggest problem is we train them and put the time in, and then they leave us for oil and gas.” - Manufacturing

‣ “We have specific skill sets in a niche market, so it's finding the training.” - Manufacturing

‣ “The training out there is not customized to our needs, so sending them away for something doesn't make sense when we can teach them how we want it done. Training seems easier when it is a customized way of doing things rather than a generic course.” - Manufacturing

‣ “The biggest challenge is making sure we have the appropriate safety training before going on certain sites. If they don't tell us in advance, we're left taking courses last minute.” - Mining & Oil & Gas

‣ “The challenge is finding decent technical training programs.” - Mining & Oil & Gas

‣ “Our employees are fully interested in upgrading their skills. However, finding training that is applicable to their jobs and not just upgrading their personal skills is a challenge. It can be hard to find courses that are practical and useful in adding to company and job performance.” - Mining & Oil & Gas

‣ “It’s just not the right economy for investing in training.” - Mining & Oil & Gas

‣ “We're a software development company, so we need to keep current with the field and that depends on any changes in the IT world.” - Other

‣ “A lot of it is the English language skills. People have very poor written skills nowadays and they're unable to present themselves by email or in proposals. This is true of new Canadians, but that's understandable. The texting generation is the real issue.” - Other

‣ “It's an industry specific problem. There's so much to learn and people need to be trained on the job by someone higher up in the industry.” - Professional, Scientific & Technical Services

‣ “The challenge is trying to get everybody together in the same location. Everybody is an owner-operator and they're usually out on the road.” - Transportation & Warehousing

‣ “I've been in this industry for 40 years. People have to have people skills and be the right personality to succeed. The courier business is a percentage business and if one person's paycheck is bigger than another's there are reasons for it. I don't know until I've worked with them for a while if they're the right person for the job because my best contractors come from all walks of life. This is a service business, so you have to be honest and a people person to garner clients. My clients get to know the individual that comes to their door and often they will phone the driver direct with future business.” - Transportation & Warehousing

‣ “Keeping them motivated and buying into what the brand philosophy is is always a challenge. Also, getting the ideal candidate can be very elusive.” - Wholesale & Retail Trade

‣ “Training them to how I want them to be is challenging. I can't make someone great at customer service if they don't have that type of personality.” - Wholesale & Retail Trade


88 EMPLOYER SURVEY

Employers indicated they provide training or pay for training in a variety of areas.The top areas in which employers either provide training or pay for training are professional and technical (44 per cent), new employee orientation (38 per cent), customer service/customer relations (34 per cent), management and supervisory (28 per cent) and occupational health and safety (28 per cent). Thirteen per cent of the employers either provide or pay for training in basic skills (numeracy/literacy).Comments‣ “We're developing a new technology that

would make it easier for the consumer to purchase insurance online. This is very new to Canada, so it's exciting to be a part of it.” - Finance, Insurance, Real Estate & Leasing

‣ “Our training and development is research-focused.” - Health Care & Social Assistance

‣ “I would say safety. We have to focus more and more on that. That's the main area.” - Manufacturing

‣ “All I try to do is keep up to date with new trends and computer technology.” - Mining & Oil & Gas

‣ “We certainly train across all areas when considering the company as a whole.” - Mining & Oil & Gas

‣ “Due to downsizing, we're just focusing on the sales aspect.” - Wholesale & Retail Trade

‣ “It's mainly the customer service and meat wrapping that we focus on.” - Wholesale & Retail Trade

Employers have responded to the difficulty recruiting qualified employees in the last 12 months by increasing investment in training.As discussed earlier, employers have responded to the difficulty recruiting qualified employees in a variety of ways. In terms of training, 41 per cent of the 44 employers reported they increased investment in in-house training, 11 per cent increased investment in third-party training, and 2 per cent applied for a Canada-Alberta Job Grant. The Canada-Alberta Job Grant offers funding toward the cost of training provided by eligible third-party trainers. The total cost of training is shared between the Government of Canada and employers.

13%$17%$

20%$20%$20%$21%$23%$23%$

27%$28%$28%$

34%$38%$

44%$

0%$ 10%$ 20%$ 30%$ 40%$ 50%$

Basic$skills$2$numeracy/literacy$Interpersonal$skills$Product$knowledge$

IT/computer$training$Team$building$skills$

ExecuFve$development$Sales$

Quality$Equipment$

OccupaFonal$health$and$safety$Management$and$supervisory$skills$

Customer$service/relaFons$New$employee$orientaFon$

Professional$and$technical$training$

In#which#of#the#following#areas#does#your#company#either#provide#training#or#pay#for#training?#


89 EMPLOYER SURVEY

Canada-Alberta Job GrantAll 201 employers were asked if they have ever applied for or received or have plans to apply for a Canada-Alberta Job Grant, regardless of whether or not they had difficulty recruiting qualified employees in the last 12 months. Four per cent of the employers reported they have applied for a grant in the past, or have plans to apply, 95 per cent said they have not applied or have no plans to and 1 per cent was unsure.

Of the 95 per cent (191 employers) that have never applied for or do not have plans to apply for a Canada-Alberta Job Grant, 28 per cent said they have never heard of it and 6 per cent said they don’t know much about it. In addition, 28 per cent of the employers said they are not hiring at this time, 19 per cent said their training needs are already taken care of, and 17 per cent said they don’t need to train. Nine per cent of the employers said they don’t have a budget for training and 8 per cent believe applying for a Job Grant is too much of an administrative burden.Comments‣ “We get a summer student grant through Canada Summer Jobs. Beyond that, I don’t know what’s

available for funding.” - Accommodation & Food Services/Arts & Entertainment

‣ “We apply annually for summer jobs, career placement and STEP funding. However, we’ve never come across this one.” - Accommodation & Food Services/Arts & Entertainment

‣ “We don't have the funds to match.” - Health Care & Social Assistance

Response to hiring difficulties Employers %

Increased recruiting efforts 61%Did not fill the job opening 48%Increased workload for current workers 43%Increased investment in training provided by in-house staff 41%Hired a less qualified applicant 30%Hired contingent workers, including temps, contractors and freelancers 27%Redeployed employees to new roles where their skills were more needed 16%Targeted underutilized or new talent pools * 16%Increased wages/benefits to attract more applicants 14%Increased investment in training provided by a third-party 11%Outsourced the work 7%Applied for/hired temporary foreign workers 7%Partnered with educational institutions to ensure programs develop candidates with the right skills 5%Started actively hiring out of province/country 2%Redesigned the job to change the required skills 2%Applied for a Canada-Alberta Job Grant 2%Nothing 7%Note: 44 employers reported having difficulty recruiting qualified employees.* Mature workers, stay at home parents, persons with disabilities, Aboriginal peoples, etc.

How has your company responded to the difficulty recruiting qualified employees?

1%#2%#

6%#6%#7%#8%#9%#

17%#19%#

28%#28%#

0%# 10%# 20%# 30%#

No#reason/unsure#Company#is#downsizing/closing#

Don't#know#much#about#it#Don't#think#we#qualify#

Management/head#office#decision#AdministraJve#burden#

Don't#have#the#budget#for#training/too#costly#Don't#need#to#train#

Training#needs#are#already#taken#care#of#Not#hiring#at#this#Jme#

Never#heard#of#it#

Reasons'company'has'never'applied'for'or'has'no'plans'to''apply'for'a'Canada5Alberta'Job'Grant'


90 EMPLOYER SURVEY

‣ “The topic of the Job Grant has come up and we're certainly considering it.” - Manufacturing

‣ “We're unsure about the future of the company in Alberta.” - Mining & Oil & Gas

‣ “We have downsized considerably, so we won’t be applying for that.” - Wholesale & Retail Trade

‣ “Training is not a priority for us.” - Wholesale & Retail Trade


91 EMPLOYER SURVEY

Job Bank Analysis

Service Canada’s Job Bank is the country’s largest bi-lingual online listing of job opportunities in Canada. Job seekers are able to view thousands of new job opportunities across Canada every day and access online tools such as Job Match, Job Alert, Resume Builder and Career Navigator free of charge. The site also has a training and careers section, which helps job seekers identify career options, as well as provides information on trends, employment prospects and salary ranges of occupations. Employers have access to a variety of HR management information resources and can advertise and manage their job postings online at their own convenience free of charge.

City of CalgaryFor the City of Calgary, there were 4,576 job postings145 on the Job Bank in the fourth quarter of 2015, advertising for a total of 11,560 positions. This was down from 16,148 positions the previous quarter and down 55 per cent from 25,815 positions year-over-year. The most significant year-over-year declines in advertised job positions were in natural and applied sciences occupations and occupations unique to processing, manufacturing and utilities - both down approximately 70 per cent. The top five occupations advertised in the fourth quarter of 2015 were food counter attendants, kitchen helpers and related occupations (1,213 positions), cooks (851 positions), food service supervisors (763 positions), truck drivers (454 positions) and retail salespersons and sales clerks (393 positions).

Number of Positions by OccupationQ4 2014 and 2015, City of Calgary

!95!!

!364!!

!384!!

!469!!

!544!!

!552!!

!845!!

!1,369!!

!4,615!!

!6,911!!

!263!!

!512!!

!498!!

!559!!

!1,182!!

!1,301!!

!1,049!!

!1,869!!

!8,766!!

!10,319!!

!-!!!! !2,000!! !4,000!! !6,000!! !8,000!!!10,000!!!12,000!!

Health!Primary!Industry!

Social!Science,!Educ.,!Gov't!&!Religion!Art,!Culture,!RecreaKon!&!Sport!

Processing,!Manufacturing!&!UKliKes!Natural!&!Applied!Sciences!

Management!Business,!Finance!&!Admin.!

Trades,!Transport!&!Equip.!Operators!Sales!&!Service!

Q3!2014! Q3!2015!


145 Total job postings are all unduplicated postings appearing in the Job Bank each week. This figure includes postings from the previous weeks that have been reposted as well as new job postings.

JOB BANK ANALYSISThis section provides a summary of jobs posted to the Job Bank in the fourth quarter of 2015.

92

Communities Surrounding CalgaryFor the communities surrounding Calgary,146 there were 1,065 job postings on the Job Bank in the fourth quarter of 2015, advertising for a total of 3,953 positions. This was down from 4,516 positions the previous quarter and down 45 per cent from 7,242 positions in the fourth quarter of 2014. The number of advertised positions for business, finance and administration occupations more than doubled year over year in the fourth quarter of 2015, while the number of advertised positions for natural and applied sciences occupations and health occupations declined by 75 per cent each. The top five occupations advertised in the fourth quarter of 2015 were truck drivers (892 positions), customer services, information and related clerks (261 positions), food service supervisors (237 positions), cooks (200 positions) and industrial butchers and meat cutters, poultry preparers and related workers (160 positions).

Banff/Canmore AreaFor the Banff/Canmore area, there were 362 job postings on the Job Bank in the fourth quarter of 2015, advertising for a total of 1,174 positions. This was down from 1,649 positions the previous quarter and down 66 per cent from 3,416 positions in the fourth quarter of 2014. Sales and service occupations accounted for the majority of the advertised positions in the fourth quarter of 2015, but were down 67 per cent compared to the previous year. The top five occupations advertised in the fourth quarter of 2015 were food counter attendants, kitchen helpers and related occupations (349 positions), food service supervisors (205 positions), light duty cleaners (180 positions), cooks, (69 positions) and program leaders and instructors in recreation, sport and fitness (42 positions).

Number of Positions by OccupationQ4 2014 and 2015, Surrounding Communities

!7!!

!17!!

!33!!

!47!!

!96!!

!272!!

!297!!

!391!!

!1,227!!

!1,566!!

!7!!

!69!!

!32!!

!183!!

!183!!

!866!!

!133!!

!771!!

!2,589!!

!2,409!!

!-!!!! !500!! !1,000!!!1,500!!!2,000!!!2,500!!!3,000!!

Art,!Culture,!Recrea8on!&!Sport!Health!

Social!Science,!Educ.,!Gov't!&!Religion!Natural!&!Applied!Sciences!

Management!Processing,!Manufacturing!&!U8li8es!

Business,!Finance!&!Admin.!Primary!Industry!Sales!&!Service!

Trades,!Transport!&!Equip.!Operators!

Q4!2014! Q4!2015!

Number of Positions by OccupationQ4 2014 and 2015, Banff/Canmore Area

!1!!

!2!!

!6!!

!7!!

!9!!

!9!!

!21!!

!42!!

!61!!

!1,016!!

!7!!

!10!!

!10!!

!24!!

!10!!

!27!!

!90!!

!62!!

!103!!

!3,073!!

!+!!!! !500!!!1,000!!!1,500!!!2,000!!!2,500!!!3,000!!!3,500!!

Natural!&!Applied!Sciences!

Health!

Processing,!Manufacturing!&!UEliEes!

Business,!Finance!&!Admin.!

Social!Science,!Educ.,!Gov't!&!Religion!

Primary!Industry!

Management!

Art,!Culture,!RecreaEon!&!Sport!

Trades,!Transport!&!Equip.!Operators!

Sales!&!Service!

Q4!2014! Q4!2015!


146 Including but not limited to Airdrie, Chestermere, Cochrane, High River and Okotoks.

93 JOB BANK ANALYSIS

Calgary (city) Positions - Q4 2015147

NOC Code Occupation Positions

6641 Food Counter Attendants, Kitchen Helpers and Related Occupations 1,213 6242 Cooks 851 6212 Food Service Supervisors 763 7411 Truck Drivers 454 6421 Retail Salespersons and Sales Clerks 393 1453 Customer Service, Information and Related Clerks 326 7271 Carpenters 319 6661 Light Duty Cleaners 243 4212 Social and community service workers 219 8612 Landscaping and Grounds Maintenance Labourers 210 7611 Construction Trades Helpers and Labourers 206 7322 Motor Vehicle Body Repairers 205 7284 Plasterers, Drywall Installers and Finishers and Lathers 204 0631 Restaurant and Food Service Managers 195 5254 Program leaders and instructors in recreation, sport and fitness 193 6651 Security Guards and Related Occupations 190 6622 Store shelf stockers, clerks and order fillers 184 7452 Material Handlers 171 5252 Coaches 156 6411 Sales Representatives - Wholesale Trade (Non-Technical) 147 6211 Retail Trade Supervisors 143 6474 Babysitters, Nannies and Parents' Helpers 142 7291 Roofers and Shinglers 132 7282 Concrete Finishers 128 7421 Heavy Equipment Operators (Except Crane) 122 6453 Food and Beverage Servers 106 6215 Cleaning Supervisors 104 1471 Shippers and Receivers 99 ,0621 Retail Trade Managers 98 9619 Other Labourers in Processing, Manufacturing and Utilities 93 7294 Painters and decorators (except interior decorators) 88 7251 Plumbers 85 6611 Cashiers 79 7283 Tilesetters 78 1122 Professional occupations in business management consulting 73 7414 Delivery and Courier Service Drivers 71 0611 Sales, Marketing and Advertising Managers 68 6662 Specialized Cleaners 68 7265 Welders and Related Machine Operators 65 6221 Technical Sales Specialists - Wholesale Trade 64 7321 Automotive service technicians, truck and bus mechanics and mechanical repairers 64 7443 Automotive Mechanical Installers and Servicers 63 9617 Labourers in food, beverage and associated products processing 63 6671 Operators and Attendants in Amusement, Recreation and Sport 62 1221 Administrative Officers 59 7441 Residential and Commercial Installers and Servicers 59 7272 Cabinetmakers 58 2171 Information Systems Analysts and Consultants 56 7244 Electrical Power Line and Cable Workers 56 6681 Dry Cleaning and Laundry Occupations 53 2225 Landscape and horticulture technicians and specialists 51 8256 Supervisors, Landscape and Horticulture 51


147 Only occupations with 50 or more positions are shown in the table.


Communities Surrounding Calgary Positions - Q4 2015148


7411 Truck Drivers 8921453 Customer Service, Information and Related Clerks 2616212 Food Service Supervisors 2376242 Cooks 2009462 Industrial Butchers and Meat Cutters, Poultry Preparers and Related Workers 1606641 Food Counter Attendants, Kitchen Helpers and Related Occupations 1528432 Nursery and Greenhouse Workers 1348253 Farm Supervisors and Specialized Livestock Workers 1057271 Carpenters 1046474 Babysitters, Nannies and Parents' Helpers 1036251 Butchers and Meat Cutters - Retail and Wholesale 1006421 Retail Salespersons and Sales Clerks 777282 Concrete Finishers 699617 Labourers in food, beverage and associated products processing 627284 Plasterers, Drywall Installers and Finishers and Lathers 578611 Harvesting Labourers 557321 Automotive service technicians, truck and bus mechanics and mechanical repairers 516211 Retail Trade Supervisors 507611 Construction Trades Helpers and Labourers 490631 Restaurant and Food Service Managers 478431 General Farm Workers 427452 Material Handlers 416622 Store shelf stockers, clerks and order fillers 406453 Food and Beverage Servers 378612 Landscaping and Grounds Maintenance Labourers 317291 Roofers and Shinglers 307322 Motor Vehicle Body Repairers 307443 Automotive Mechanical Installers and Servicers 306215 Cleaning Supervisors 292225 Landscape and horticulture technicians and specialists 286651 Security Guards and Related Occupations 286623 Other sales related occupations 246661 Light Duty Cleaners 240621 Retail Trade Managers 237245 Telecommunications Line and Cable Workers 237292 Glaziers 237283 Tilesetters 216411 Sales Representatives - Wholesale Trade (Non-Technical) 207219 Contractors & Supervisors, Other Construction Trades, Installers, Repairers & Servicers 207242 Industrial Electricians 194214 Early Childhood Educators and Assistants 176611 Cashiers 159613 Labourers in Chemical Products Processing and Utilities 15




Banff/Canmore Area Positions - Q4 2015149


6641 Food Counter Attendants, Kitchen Helpers and Related Occupations 3496212 Food Service Supervisors 2056661 Light Duty Cleaners 1806242 Cooks 695254 Program leaders and instructors in recreation, sport and fitness 426421 Retail Salespersons and Sales Clerks 356435 Hotel Front Desk Clerks 336442 Outdoor Sport and Recreational Guides 297281 Bricklayers 246441 Tour and Travel Guides 226241 Chefs 166216 Other Service Supervisors 156211 Retail Trade Supervisors 116663 Janitors, Caretakers and Building Superintendents 116681 Dry Cleaning and Laundry Occupations 100631 Restaurant and Food Service Managers 87241 Electricians (Except Industrial and Power System) 87251 Plumbers 87282 Concrete Finishers 67412 Bus Drivers and Subway and Other Transit Operators 68253 Farm Supervisors and Specialized Livestock Workers 69619 Other Labourers in Processing, Manufacturing and Utilities 66453 Food and Beverage Servers 5




Appendix A: Survey Methodology

The Q4 2015 Calgary and Area Employer Survey is based on responses to a telephone questionnaire conducted in October, November and December 2015 of Calgary and area employers with <10 employees (micro-sized employers). Following are the number of respondents from each industry sector.

Industry Number of Respondents

Mining & Oil & Gas 20Construction 20Manufacturing 20Wholesale & Retail Trade 21Transportation & Warehousing 20Professional, Scientific & Technical Services 20Health Care & Social Assistance 20Accommodation & Food Services/Arts & Entertainment 20Finance, Insurance, Real Estate & Leasing 20Other 20Total 201

The ‘Other’ industry category includes a variety of companies from the remainder of the industry categories: Agriculture, Utilities, Information & Culture, Management of Companies, Administrative & Support Services, Educational Services, Other Services and Public Administration.

It should be noted that the method of sample selection provides a good cross-section of opinion. Nevertheless, given the size of the sample, the statistical reliability of the survey is limited, particularly when the data is reported by industry. The value of this survey, however, goes beyond the data captured by the questionnaire. The telephone interview allows companies to expand on their responses, which provides invaluable information and comments that cannot be measured quantitatively.


APPENDIX ASurvey Methodology

97

Appendix B: Employer Survey Occupation Results

Eleven per cent of the employers laid off approximately 67 workers in the three months prior to their survey.

Industry Occupation Number of Layoffs

Accommodation & Food Services/Arts & Entertainment Housekeeper 4 Front Desk 1 Not Specified 4

Subtotal 9 Construction Heavy Equipment Operator 12 Subtotal 12 Finance, Insurance, Real Estate & Leasing Real Estate Agents 4 Subtotal 4 Health Care & Social Assistance Administration 1 Subtotal 1 Manufacturing Labourer 7

Welders 3 Adminstative 2

Subtotal 12 Mining & Oil & Gas Technical Sales Specialist 3

Project Administrator 1 Shop Manager 1 Administrative Staff 1

Subtotal 6 Other Developer 1 Sub Total 1 Professional, Scientific & Technical Services Designers 6

Interior Design 2 General Labour 1

Subtotal 9 Transportation & Warehousing Drivers 2

Warehouse 1 Subtotal 3 Wholesale & Retail Trade Boat Repair 5

Sales 2 Labour 2 Administrative 1

Subtotal 10 Grand Total 67


APPENDIX BEmployer Survey Occupation Results

98

Thirteen per cent of the employers had a total of 51 vacant positions that needed to be filled.

NOC Code Occupation Vacant Positions

1221 Administrative officers 56232 Real estate agents and salespersons 51114 Other financial officers 41123 Professional occupations in advertising, marketing and public relations 46411 Sales representatives - wholesale trade (non-technical) 37511 Truck drivers 36552 Customer service, information and related clerks 26562 Estheticians, electrologists and related occupations 26731 Light duty cleaners 29421 Chemical plant machine operators 2112 Human resources managers 1632 Accommodation service managers 11224 Property administrators 11241 Secretaries (except legal and medical) 11311 Bookkeepers 11313 Insurance underwriters 11521 Shippers and receivers 15241 Graphic designers and illustrators 16221 Technical sales specialists - wholesale trade 16315 Cleaning supervisors 16322 Cooks 16421 Retail salespersons 16511 Maîtres d'hôtel and hosts/hostesses 16513 Food and beverage servers 16525 Hotel front desk clerks 16611 Cashiers 16711 Food counter attendants, kitchen helpers and related occupations 17322 Motor vehicle body repairers 17622 Railway and motor transport labourers 1


99 APPENDIX B

Documents

Calgary and Area Labour Market 2015 - Quarterly …...2015>Q4 This Calgary and Area Labour Market Report provides labour market and economic information for the Calgary Region, Alberta