If oil prices don’t bounce back soon, we might have to start thinking of Western Canada as one of the poor parts of the country.
That might be hard to conceive right now, but consider the recent data coming in.
According to last month’s establishment survey of payrolls, the Maritimes and central Canada are now leading wage growth in the country, while Western Canadian provinces fall behind.
And in a client note Tuesday morning, BMO chief economist Doug Porter notes a “sign-of-the-times” statistic: The unemployment rate in London, Ont., is now the same as Calgary and Edmonton — 5.9 per cent.
Why does this matter? Because London is “shorthand for the manufacturing-based Southwestern Ontario economy,” Porter writes. And when its unemployment rate is the same as Calgary’s, that suggests a major shift in the economy, away from energy exports and towards consumer-driven growth.
"Aside from a very brief spell in 2004 ... this is the only time that London’s rate has not been above Calgary’s in the past 15 years," Porter wrote. He offered up this chart, under the headline "Canada's shifting job market revealed in one simple chart."
“At the start of the year, the widespread view was that the industrial heartland would finally thrive, while the resource–rich areas would struggle,” Porter writes.
“Even as manufacturing has yet to show a lot of spark, that forecast has largely played out in the job market and in retail sales.”
And, indeed, manufacturing isn’t showing “a lot of spark.” Thanks to a U.S. economy that is either recovering or shaky, depending on which data you look at, manufacturing sales in Canada fell 2.1 per cent in April, and were down 7.3 per cent from their peak in July, 2014.
So it seems to be shoppers and homebuyers who are holding up the new post-oil-crash economy, thanks to lower energy bills.
That certainly seems to be the case in London, where the housing market just had its best June ever. Detached home sales were up 11.5 per cent, while condo sales soared 19.9 per cent.
In Calgary, meanwhile, home sales were down 17.8 per cent in the year to June, and prices were down 1.5 per cent.
So out-of-work Albertans may want to consider a job in construction in southern Ontario....
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