The Leduc-Nisku EDAtorial
Leduc Blog
Getting the Car Outta the Mud
August 18, 2016
As my summer with the Leduc-Nisku EDA comes to an end, I figured it would be fitting to give a brief layman’s market update. As this provincial economy begins to regain traction on wet and muddy roads (kick it into AWD), what lays on the horizon for us? Whether you are bearish or bullish when it comes to the markets, I believe there are several sources for both rejoice and concern as we move into football … I mean, fall season.

Agriculture

The Ag sector is well positioned to post stronger numbers as we move into fall. Following several years of less than desirable weather conditions, it seems that 2016 will bring about a collective sigh of relief from Alberta’s Agriculture sector. In its most recent crop reports, the Government of Alberta has indicated that precipitation accumulation during July and August has been well above the benchmark 50 year average. In addition, yields for the North West region (Leduc, Edmonton, Barrhead, Drayton Valley, Athabasca) are currently at 120 per cent, up from 86 per cent last year. Now, before you break out and start singing Luke Bryan’s Rain is a Good Thing, this pundit reminds you that we still need to make it through the rest of harvest season so let’s try not to put the horse too far before the carriage…    

Energy

Volatility in crude oil and natural gas prices throughout the summer have been a source of instability in the energy sector. West Texas Intermediate (WTI) prices have been making strong gains (up 20 per cent) after falling to USD $40 per barrel at the end of July, and Baker Hughes drilling rig counts in Alberta have steadily increased to 81 active rigs (up from 31 at the beginning of July). Growing price and activity trends is largely the result of declining crude stockpiles that is helping to ease the global supply glut. However, the accumulation of energy sector job losses over the past two years is not something that can be undone in a few months. Still, there is positive sentiment that a sustained upward trajectory in commodity prices and sector activity will help many of the oil field services companies regain footing after facing two difficult years. 

Manufacturing

Provincial manufacturing businesses have been under a tight squeeze since 2014. A recent report in ATB’s the Owl confirms that manufacturing job losses since July 2014 are above 30,000, making it only second in losses next to the energy & natural resources sector. In response, the provincial government is making attempts to mitigate labour market losses through diversification into the bio-industrial sector. Alberta Innovates Bio Solutions has recently announced $12.7 million in new funding that will support a number of new projects. Over the next few years, these projects will hopefully grow demand for new manufactured products and put hardworking Albertans back on top.
 
Conclusion
In my previous blog post, I made a point of noting the ‘can do’ and ‘will do’ attitude that has embodied the spirit of Albertans in hard times. As Alberta’s economic rainy days start to subside, the stage is set for the hardworking residents of our province to once again experience prosperity under the blue prairie sky.