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July 2015 Alberta Economic Fundamentals

Ally

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There was a time when a lot of hard work and attention was put on being the provincial leader for fiscal responsibility... Now? That work is being reversed

Just a decade after Ralph Klein proclaimed Alberta debt free, the province has racked up debt at a pace that could affect its triple-A credit rating, Moody’s Investors Service says in its July report.

The report says Alberta’s debt burden could double this year from around 30 per cent of revenues to 60 per cent if the province continues to invest heavily in infrastructure.

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Schlumberger is done with lay-offs and counting on recovery

Schlumberger management held a conference call Friday morning to discuss their business outlook.

The optimism from yesterday's earnings press release where they called the bottom for North America drilling activity spilled over. Yesterday, we recapped the key takeaways from the press release.

Now here are the most important new points from the outlook discussion on Friday morning:

  1. No More Lay-offs, No More Cost Cuts - Preparing For Growth. Good news for Schlumberger employees and suppliers. Schlumberger is done with lay-offs, and has their cost structure where they want it. In anticipation of growth later this year and in 2016, management is willing to preserve their current organizational scale even though it means taking a margin hit next quarter. Lay-offs are shelved unless things get meaningfully worse in 4Q or 2016, and other companies are likely to follow SLB's lead.
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City of Calgary wants to know: Would you live in a building without parking? They are considering even more no parking buildings. Have your say Today

On May 13, 2015, Calgary City Council approved the city's first zero parking building - a condo with no parking stalls provided for cars. Zero-parking buildings have been appearing in other North American cities in recent years. Your input will give The City a general indication of interest in zero-parking buildings.

Respond here.
 

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Iranian oil could hurt Russia and the U.S.

The U.S. and Russia have taken a big gamble with the Iran nuclear deal: It threatens both countries' oil industries and, in Russia's case, also its economic growth. Much depends now on whether Iran can ramp up oil production as fast as it says, and on whether speculators react to these efforts as they did to news of the deal.

The price of Brent crude rebounded last spring, reaching a peak of almost $68 per barrel on May 6, but then plunged to $56 in early July as the Iran talks showed signs of progress. Analysts mentioned other reasons for the drop -- the uncertainty over how the Greek crisis would affect European demand, the Chinese stock crash -- but any speculative influence these might have had on the oil price is gone by now. When the Iran deal was reached on July 14, Brent remained at $56 per barrel.

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Edmonton house stats still reading strong

Edmonton, July 3, 2015: For the first time in 2015, the REALTORS® Association of Edmonton recorded an increase in year-over-year reported sales for the month. June 2015 Census Metropolitan Area (CMA) had 2,008 reported sales for all residential properties, 2.4% over the 1,961 all residential sales reported in June 2014. This number includes 1,243 single family dwellings (2.1% more than 2014), 572 condo sales (1.6% more than from 2014) and 156 duplex/rowhouses (11.4% more than 2014). Sales were also up 13% in June from the reported sales in May 2015.

“We finally saw prices take the expected small dip month over month that we have been waiting to see due to lower sales and higher inventory. Prices still remain higher than the same time last year and with sales ramping up again and inventory starting to settle, we likely won’t see our prices drop much more than this,” explains Geneva Tetreault, President of the REALTORS® Association of Edmonton.

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Here’s another positive game-changer for Calgary real estate investors. The Feds have committed the funds to fast-track the new LRT line in the city. You know what to do! Here is the map, here are all the stations – time to get to work

In a historic move, the federal government has announced 1.5 billion dollars from the Public Transit Fund will be awarded to the Green Line project. This is the single largest infrastructure investment in Alberta’s history.

What does this mean for Calgarians?
The Green Line was initially planned to be constructed over 30+ years, starting as a bus-only Transitway, and later converting to LRT. This announcement from the Federal Government means that Calgarians in the north and southeast areas of the city will be able to enjoy faster, more reliable, light rail service ahead of schedule. Currently, 290,000 Calgarians are estimated to live along the Green Line corridor, with thousands more working and visiting the newly developing employment hubs and community activity centres on the route. The Green Line will not only bring transit into communities, but will connect neighbourhoods where Calgarians can live, work and play close to transit.


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Check out the proposed route of newly funded #Calgary Green Line. Anyone else see key neighbourhoods in this vid?

The Green Line will be an important piece of Calgary's transit network, connecting Southeast and North Calgary with high quality transit service.

The Green Line will be made up of two legs: the North leg will run from the future community of Keystone to downtown, and will connect with

Watch the video here.
 

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Moran brings a broader view of Calgary's economic development

Moran took over as chief executive from her former boss at Calgary Economic Development in June just as the city struggles to adjust to the sudden downturn in the once-booming economy after the collapse in oil prices in the last year.

She acknowledges the current outlook isn’t overly inspiring.

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The real life unit tended consequences of a $15 minimum wage. Playing out in Seattle already

As the push continues in various locations around the country to raise the minimum wage to $15 per hour, the real world consequences of such a move have begun to surface.

Seattle became the first city in the nation to implement the $15 per hour minimum wage this past spring. Fox News reports that one unintended effect is that workers who are earning the higher wage are asking for fewer hours, so they can remain eligible for low income government benefits like childcare and tax credits.

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How Math will play a role in #Calgary housing prices falling in second half of 2015

The board predicted the residential benchmark price will be $448,354 by the end of December — a 0.2 per cent decline from 2014. In January, it said prices would rise 1.6 per cent this year. The benchmark price represents what CREB considers a typical property sold in the market.

Its updated forecast predicts 19,798 MLS sales — a 22 per cent plunge from 2014 and six per cent below the five-year average. In its earlier forecast, CREB expected sales would decline by only four per cent.

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Nova Chemicals' Red Deer expansion on target for startup late next year up to 800 jobs on site

The workforce is ramping up on Nova Chemicals’ $1-billion polyethylene plant expansion.

About 400 to 450 contract workers are on the project and more will be added over the summer until reaching a September peak of 800, a number that will hold steady for about six months.

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Calgary's population grew at 3rd fastest pace in its history last year! Putting upward pressure on housing and downward pressure on vacancy rates

The city’s total population now stands at 1,230,915, an increase of 35,721 from 2014. Much of the growth was concentrated in the southeast quadrant of the city, although the northwest community of Evanston took top spot for fastest growing area with 2,853 new residents.

That growth, spanning April 2014 to April 2015, was lower than last year’s record-setting-figure of 38,508 across Calgary, but easily outstrips previous projections of 25,000 used by the city to base its four-year budget. And that will present challenges to the city as it struggles to build and maintain infrastructure to accommodate Calgarians, said Mayor Naheed Nenshi.

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Housing prices forecast to ease in second half, CREB forecasts

CALGARY, July 29, 2015 /CNW/ - Continued weakness in housing demand will limit downward pressure on supply levels and cause prices to ease in the second half of the year, CREB® said in its 2015 mid-year forecast. Despite this anticipated retraction, Calgary's benchmark prices are only expected to decline by less than one per cent on an annual basis.

"Further job losses are expected in the second half of the year," said CREB® chief economist Ann-Marie Lurie. "These employment changes, combined with overall weakness and slower than anticipated recovery of oil prices, are expected to keep housing demand relatively weak for the rest of 2015. However, with the initial shock of oil price declines having dissipated, the pullback in sales activity in the second quarter is not expected to be as dramatic as the first part of the year," said Lurie.

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Calgary's population tops 1.2 million according to new census figures

The city’s total population now stands at 1,230,915, an increase of 35,721 from 2014. Much of the growth was concentrated in the southeast quadrant of the city, although the northwest community of Evanston took top spot for fastest growing area with 2,853 new residents.

That growth, spanning April 2014 to April 2015, was lower than last year’s record-setting-figure of 38,508 across Calgary, but easily outstrips previous projections of 25,000 used by the city to base its four-year budget. And that will present challenges to the city as it struggles to build and maintain infrastructure to accommodate Calgarians, said Mayor Naheed Nenshi.

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Kevin O'Leary on Alberta: 'The person running the energy sector doesn't know anything about energy'

Global energy producers have shelved $200 billion US worth of spending on over 45 major projects since the dramatic collapse in the price of oil, according to Wood Mackenzie Ltd. The Edinburgh-based researcher says 20 billion barrels of reserves have been left in the ground, with Canada’s oil sands accounting for 30 percent of that figure.

The plug in the investment pipeline shouldn’t come as a shock, especially to those in Canada’s energy patch, according BNN commentator Kevin O’Leary. He says what the Wood Mackenzie report fails to realize with respect to the worsening situation in Alberta is the impact of the newly-elected NDP government’s less-than-transparent approach to reviewing energy royalties and taxing corporations -- key campaign promises that saw the Rachel Notley government end 44 years of Progressive Conservative rule last May.

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Cenovus and Shell slash jobs and spending, Suncor on the other hand increases dividend with increased profit

CALGARY – Deeper cuts among oilsands companies are causing more pain in Alberta, as major producers announced reduced spending and more layoffs during second quarter earnings calls Thursday.

Cenovus Energy Inc., which cut 800 jobs earlier this year, announced that it had identified as many as 400 more positions that are “no longer required because of a decrease in work due to the continued low oil price environment,” according to a release.

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Shock of collapsing commodity prices is dividing the oilsands sector. Some winners and some losers

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