Crisis in Greece. Skyrocketing US debt. Stock market gyrations. It seems that while the rest of the world braces for an economic slowdown and turmoil, Alberta keeps chugging right along. And the most obvious measure of that lately has been in the jobs market.
In September, the province saw 8,600 new jobs created over the previous month. That is the fifth consecutive month in a row of rising employment—something that doesn’t happen often, even during a booming economy. Compared to a year ago, Alberta’s total employment is up by 98,000 jobs, an increase of 4.8%. The unemployment rate is 5.4%, well below the 9.1% suffered by our American neighbours to the south, and nearly a third compared to places like Michigan and California.
So what’s going on? How is it that Alberta continues to churn out strong employment growth when the rest of the world seems to be softening?
The most obvious factor—something which will come as little surprise to most Albertans—is that the energy sector is fuelling economic and employment growth. With oil having traded within a band between $US 80-100 per barrel for most of 2011, producers of conventional crude and bitumen have been ramping up activity. Drilling numbers have been very solid this year compared to the last few, and oilsands projects are already running into some labour shortages in the north and north-eastern parts of the province.
Ironically, however, employment in the category labelled “Forestry, fishing, mining, quarrying, oil and gas extraction” has not seen strong employment gains. It is up only 3,300 jobs over the past twelve months (+2.2%). That may be because during the downturn of 2009 and early 2010, energy producers held on to much of their employment base, not wanting to have to attract them back when prices recovered.
The strongest sectors of employment gains in Alberta have been in manufacturing, up a whopping 23,600 jobs over the past year, for an increase of 18.9%. Much of that is indirect employment spurred on by a revitalized energy sector—steel pipe, specialized machinery and equipment for oilsands projects, and refined petroleum products.
Other areas showing strong gains include the “professional, scientific and technical services”—many of which also feed into the gains seen in the energy sector. This would include engineers, geologists, and geophysicists. Overall this sector saw a gain of 19,000 new jobs (+12.8%). Another 10,000 jobs were created in accommodation and food services, and it is not hard to imagine that much of that was generated in rural areas of the province as a result of oilfield crews needing hotel rooms and meals.
When economists analyze employment data for signs of economic health, they look particularly at two specific measures: Are the jobs full time? And are they in the private sector? Part-time jobs are better than no jobs at all, but obviously full-time work is better. And jobs created in the public sector do help boost employment and income, but they are not driven by economic conditions in the same way private sector jobs are.
In both of these measurements, Alberta’s performance has been stellar. In fact, compared to a year ago, part-time jobs have actually fallen (down by about 1,100), which means on a net basis full-time jobs were up 99,800 (+6.0%). And public sector jobs did rise, but by only 900 positions. That means that virtually all of the jobs created since September 2010 were full-time, private sector jobs.
So what’s the down side?
Very little, unless you start to consider the problem of labour shortages returning to the province. Already, places like Fort McMurray, Cold Lake, Lloydminster, and Lac La Biche are having some trouble attracting the skilled workers they need. And with an overall unemployment rate of 5.4%, the rest of the province may start feeling the pressures too. Increased interprovincial and international migration, including finding workers from the United States, will be part of the solution. A related problem for employers is rising wages, which could crimp the bottom line for some Alberta companies.
Going forward, there is no guarantee that Alberta’s job market will continue to perform so strongly. Indeed, it is more likely to cool in the fourth quarter of 2011. Softer oil prices may crimp budgets a bit, and energy producers may be forced to reconsider and renegotiate contracts with outside service providers. And with the tone of the global economy growing increasingly worrisome, those oil prices may prove to be softer yet over the winter.
Nonetheless, even if Alberta does not add one single new job in the remaining three months of 2011, we will end the year with an employment gain of 3.6%—which makes us truly the envy of the world.