Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Monthly Updates on Current Financial Issues and Economic Trends Recommendation: That the July 9, 2009, Deputy City Manager’s Office report 2009DCM050 be received for information. More houses were sold in June than in May 2009 for marginally higher prices. The timing of the recovery of the real economy remains uncertain. Economic Indicators Population Canada's population increased by 0.26% (88,006) in the first quarter of 2009, the fastest first-quarter growth rate since 2001. The increased pace in population growth was due mainly to a rise in the number of non-permanent residents in most of the provinces and territories. Alberta again recorded the fastest growth among the provinces. Alberta's population increased by 0.59% (21,357), more than double the national average during the first quarter. The province's growth rested notably on the highest rate of net interprovincial migration in the country. Report Summary This report provides an analysis of key economic and financial indicators for the month of June. These indicators are being monitored on a monthly basis to determine any significant impacts on Edmonton’s 2009 budget. Previous Council/Committee Action At the January 28, 2009, Executive Committee meeting, the following motion was passed: That monthly updates be provided to Executive Committee with regard to the current financial issues with respect to the 2009 Budget. There remain some signals of an upturn in economic activities. Report Oil and Gas Attachment 2 provides the most up to date economic and financial indicators and their implications for the City of Edmonton. The natural gas price dropped for the fourth consecutive month to $3.41/GJ. General Comments The monthly average oil price increased by $2.53/Barrel in May, but was still 58% lower than the price of May, 2008. Most of the indicators of the real economy remain weak: The Canadian GDP continues to shrink Alberta’s consumer prices fell relative to a year ago. ROUTING – Executive Committee | DELEGATION – J. Tustian/C. Warnock WRITTEN BY – D. Faber | July 9, 2009– Deputy City Manager’s Office 2009DCM050 Page 1 of 2 E 9 Monthly Updates on Current Financial Issues and Economic Trends Real Estate Market Residential sales in June reached 2,552 units which surpassed the 2007 record of 2,203 units sold and was the third best month for unit sales in MLS® System history. Listing activity slowed slightly from last month (down 0.03%) with 3,179 residential listings. The strong sales drove the sales to listing ratio to 80% from 68% last month. As a result of new construction being added to the Edmonton office market and more sublease space becoming available, the overall vacancy rate increased from 4.10% in the last quarter of 2008 to 7.14% in the first quarter of 2009. Prices At the national level, consumer prices rose 0.1% in the 12 months to May 2009, down from the 0.4% increase in April. The slowdown in the 12-month Consumer Price Index (CPI) was primarily the result of an 18.3% year-over-year price drop for energy products. Consumer prices in Alberta and Edmonton declined 0.7% and 0.2% respectively on year-over-year basis. Financial Indicators Interest rates appear to be stabilizing as represented by the fixed income financial indicators. Given these low levels, investment earnings from the City’s working capital are also expected to remain low in the near term. Page 2 of 2 The Canadian dollar weakened somewhat in June, following the extremely strong month posted in May. The Canadian dollar fell six cents versus the U.S. dollar during the month to close at 86.0 cents. With respect to the equity markets, the Canadian TSX and U.S. S&P 500 indices remained basically flat for the month of June. Both markets remain in positive territory for the year at +15.4% for Canada and +1.8% for the United States. Overall, interest rates remain quite low while equity markets continue their positive performance year to date. Based on year to date market performance our earnings are tracking to the revised budget Budget/Financial Implications The impacts of current economic conditions have been addressed by the 2009 budget adjustments approved by Council on April 15, 2009. Adjustments included reducing the budgets for investment earnings and planning revenues as well as fuel and other expenditures impacted by current economic conditions. No further budget adjustments are required at this time. Attachments 1. Glossary of Terms 2. Monthly Economic and Financial Indicators – Specific Summary July 2009 Others Reviewing this Report C. Warnock, Chief Financial Officer and Treasurer Attachment 1 Glossary of Terms Glossary of Terms ACFA Borrowing Rates: The Alberta Capital Finance Authority ("ACFA") is a provincial authority that provides local entities with financing for capital projects. ACFA is able to borrow in capital markets at interest rates which would not be available to local authorities acting independently. ACFA makes loans to Alberta municipalities, school boards, and other local entities at interest rates based on the cost of its borrowings. Indicative borrowing rates are posted on the 1st and 15th of the month. The rates provided represent the level at which the City of Edmonton could borrow via AFCA. Apartment Vacancy Rate: In October of each year, the Canada Housing and Mortgage Corporation (CMHC) conducts a rental market survey across Canada. This information is released in November of each year. An apartment is considered vacant if it is physically unoccupied and available for immediate rental. The apartment vacancy rate is a percentage of all vacant apartments divided by all apartments in a region multiplied by 100. Average Weekly Earnings: Based on Statistics Canada’s Survey of Employment, Payrolls and Hours (SEPH), and Revenue Canada’s Business Payroll Survey, the average weekly earnings is calculated monthly nationally, provincially and by economic region. Information on any given month is released two months later. Bank of Canada Overnight Lending Rate: the rate at which financial institutions lend and borrow one-day funds among themselves. In conducting monetary policy, the Bank of Canada sets its target for this rate at regular intervals throughout the year. Changes in the target influence other interest rates and the exchange rate of the Canadian dollar. Building Permits: Information on building permits issued by Canadian municipalities is used as an early indication of building activity. Permits are categorized as follows: 1. Residential: Includes all buildings intended for private occupancy whether on a permanent basis or not. Dwellings include single-family, mobile, cottage, semidetached, row house and apartment building. 2. Industrial: Includes all buildings used for manufacturing and processing; transportation, communication and other utilities, and agriculture, forestry and mining. 3. Commercial: Includes all buildings used to house activities related to the tertiary sector, such as stores, warehouses, garages, office buildings, theatres, hotels, funeral parlours and beauty salons. 4. Institutional: Includes the community, public and government for buildings and structures like schools, universities, hospitals, clinics, churches, homes for the aged. Page 1 of 2 Report: 2009DCM050 Attachment 1 Attachment 1 Permit information is collected by the City of Edmonton Planning and Development Department and is available two weeks after the end of a given month. Consumer Price Index (CPI): This measure is often used as a measure of inflation. It is the rate of price change for goods and services bought by consumers and is the most widely used indicator of price changes in Canada. The CPI for a given month is usually published by Statistics Canada in the third week of the following month, and it is not revised once it has been published. DEX 60 Day Corporate Paper Index: is maintained by PC-Bond (a business unit of TSX Inc.) and measures the total return attributable to 60-day corporate paper which is issued and secured by Canadian corporations. As some of the City’s working capital is invested in money market securities (including treasury bills, bankers acceptances, corporate paper, etc.) this index, along with others, serves as an indicator of investment earnings. DEX Short Term Bond Index: is maintained by PC-Bond (a business unit of TSX Inc.) and measures the total return attributable to investment grade Canadian bonds issued by governments and corporations with a term to maturity of one to five years. As some of the City’s working capital is invested in short term bonds, this index, along with others, serves as an indicator of investment earnings. DEX Universe Bond Index: is maintained by PC-Bond (a business unit of TSX Inc.) and measures the total return attributable to investment grade Canadian bonds issued by governments and corporations with a term to maturity of more than one year. As some of the City’s endowment assets, long-term deposits, and reserves are invested in short-, medium-, and long-term bonds, this index, along with others, serves as an indicator of investment earnings. Diesel Fuel Price: Prices for diesel fuel are released by Statistics Canada by province or urban area in their publication on the consumer price index on the third week after any given month. Exchange Rate: The factor by which the amount of one currency is multiplied to yield an equivalent amount of another currency. For example, an exchange rate of $0.90 USD/CAD means that one Canadian dollar buys $0.90 U.S. dollars. Gasoline Prices: Prices for gasoline are released by Statistics Canada by province or urban area in their publication on the consumer price index on the third week after any given month. Gross Domestic Product (GDP): This is a measure of economic activity. It measures the change in value of all goods and services produced in an economic area, province or country. Statistics Canada releases national data on Page 2 of 2 Report: 2009DCM050 Attachment 1