Download 2009DCM020 Att 1

2009DCM020
Attachment 1
Monthly Economic and Financial Indicators
Narrative Summary
March 2009
Economic Indicators:
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
The economic downturn continues to have an impact on Alberta especially on the cost of
energy. In February, oil prices continued to decline reaching $39.09 US a barrel. For the
month of January, the drop in oil prices led to a decline in diesel fuel prices but not in the
price of gasoline for consumers.

According to the Canadian Mortgage and Housing Corporation, Canadian housing starts
fell 12% in January to the lowest level in more than eight years, because of fewer starts
on multiple-family dwellings. Total housing starts in the Edmonton region decreased in
January to 413 units compared with 1,145 total units reported in the same month last
year, an overall drop of 66%. January's total activity represented the lowest number of
starts for the first month of the year since 2000 when only 305 units were initiated in
January. During the same period, housing starts in the city of Edmonton dropped by
56%.

Despite these declines, there is evidence to suggest that Edmonton may be more resilient
to the downturn in the economy than other regions in Canada. Employment in Canada
fell for the fourth consecutive month in February (-82,600), bringing total losses since the
peak of last October to 295,000. Alberta shed 23,700 positions in February, the nation’s
second-largest monthly employment decline behind Ontario (-35,000). During the same
period, the Edmonton region lost 2,600 positions, 11% of all job losses in the province.

Job losses across the country led to higher unemployment rates. The unemployment rate
in Canada rose to 7.7% and 5.4% in Alberta. In February, the Edmonton unemployment
rate rose from 3.8% in January to 4.4% in February, the third lowest rate among all major
metropolitan areas in the country.

In the past five years, the Edmonton region has experienced the strongest economic
growth among major census metropolitan areas.2 Although some energy projects have
been delayed, as of January, 2009, there is still $72.8 billion in capital projects that are
underway, planned or completed in the Edmonton region.3

In February of 2009, contractors took out 370 building permits in the city of Edmonton, a
decline of 30.8% from February of previous year. The largest declines occurred in
residential (-37.2%) permits followed by industrial (-30.0%), commercial (-26.2%) and
miscellaneous (10.permits. Major increases occurred in the number of industrial permits
(1 in December, 7 in January) and other permits (20.8%) issued. For the first two months
Economic Development Edmonton (2008). Website
Alberta Finance and Enterprise (February 2009). Monthly Economic Review. P. 17
2009DCM020
Attachment 1
of this year, the total number of building permits issued by the City of Edmonton has
decreased by 40%.

There is evidence to suggest that the cost of non-residential construction may be slowing
down. As of the fourth quarter of 2008, construction costs dropped by 5.3% in the
Edmonton region. This represents the first decline in prices since the first quarter of
1993.
Financial Indicators:

Interest rates continue to trend downward as represented by the fixed income financial
indicators. This will exert downward pressure on the investment earnings from the
City’s working capital.

The Canadian dollar fell by another three cents versus the U.S. dollar during the month of
February 2009 to close at 78.4 cents. The low level of oil and continued risk aversion on
the part of investors remain contributing factors.

With respect to the equity markets, the Canadian TSX and U.S. S&P 500 indices fell by
6.6% and 11% respectively, during the month of February 2009. As a result, the TSX is
now down by 9.6% on a year to date basis while, the S&P 500 has declined by 18.6%
year to date.

Equity markets continue the considerable volatility that has been seen over the past
several months. A projection of 2009 investment earnings will be brought forward after
first quarter close. The strategy proposed for the 2009 budget was to fund any shortfall
in investment earnings by the Financial Stabilization Reserve.

The 2009 Ed Tel Dividend was set in 2008 and will equal 2009 budget.

The potential impact of the economic and financial indicators on other revenue and
expense budgets will continue to be addressed in the monthly update reports.