Download Slide 1

The Economic Impact of the
Late Night Economy
June 28, 2012
John Rose
Chief Economist
Financial Services
Agenda
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Recent developments in Edmonton’s Economy–
Slowing Growth & Rising Risks
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International Context
Canada , Alberta, Edmonton
Energy Prices
City of Edmonton, Job Growth, Employment, CPI and NonResidential Construction and Labour Costs
The Outlook - Edmonton and the Region
The Late Night Economy
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What is the late night economy?
The economic impacts
Other benefits
Global Environment
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An uneven and
anaemic recovery is
underway
Slow growth in advanced
countries solid growth in
developing economies
Momentum is slowing
building in North America
Europe to experience a
‘double dip’
Europe struggling with
debt and deficit reduction
Global financial
markets remain fragile
Spanish, Italian,
Portuguese and other
sovereign debt issues
Unresolved US debate on
deficits
% Real Growth
China
Emerging
World
Canada
US
Euro Area
-1
2
5
2012
8
2013
Source: International Monetary Fund
Canada, Alberta & Edmonton
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Canadian domestic
conditions remain good
particularly in western
provinces.
Better US expansion will
boost growth.
Alberta continues to
outperform national
average. Accelerates in
2013
2012 will be a very good
year for GDP &
outstanding employment
growth in Edmonton.
Edmonton’s growth will
slow to more sustainable
levels in 2013.
% Real Growth
0
1
2
3
4
5
City of
Edmonton
Edmonton
CMA
Alberta
Canada
2012
2013
Source: IMF, Conference Board, Economic
Trends and External Research
Oil Prices
West Texas Intermediate
140.00
120.00
100.00
5 Year Max
$US Bbl
80.00
5 Year Min
2011
60.00
2012
40.00
20.00
0.00
Jan
Feb
Mar
Apr
May
Jun
July
Aug Sept
Source: US Energy Information Administration
Oct
Nov
Dec
Source: Bloomberg
WTI Cushing
Brent Blend
West Canada Select
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
$US per barrel
Oil Price Gaps
160
140
120
100
80
60
40
20
0
Natural Gas Prices
Henry Hub
14.00
12.00
$US/mmBtu
10.00
5 Year Max
8.00
5 Year Min
2011
6.00
2012
4.00
2.00
0.00
Jan
Feb Mar
Apr
May
Jun July
Aug Sept Oct
Source: US Energy Information Administration
Nov Dec
Job Growth Stalls
7
6
5
% 4
3
2
1
Source: Statistics Canada
Fe
b
No
v
Au
g
M
ay
Fe
b
0
No
v
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8
Au
g
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Edmonton CMA Unemployment Rate
M
ay
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Jobs lost in 2008 & 2009
have now been recovered.
Edmonton’s rate of job
growth in 2011 among the
fastest of any large
municipality.
Labour force has been
growing which has
moderated wage
pressures.
Recent job losses will
delay but not prevent
expected labour shortages
and wage pressures in the
next year.
Fe
b
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Consumer Inflation is Stabilizing
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Edmonton’s year over
year inflation rate is
down to 0.4% from
relatively high levels
in 2011.
As with Alberta,
inflation will pick up
somewhat from
current levels.
Forecast is for 2.00%
in 2012.
Edmonton CMA CPI
Annual Rate of Change
0.06
0.05
0.04
0.03
0.02
0.01
0
2006
2007
2008
Source: Statistics Canada
2009
2010
2011
May
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The CMA has enjoyed a
quicker recovery has
manufacturing and nonresidential construction
activity picks up.
Over the medium term the
City growth rate
converges with that of the
region.
A somewhat younger
demographic profile
allows the City and region
to grow more rapidly then
Canada in the final years
of the outlook.
6
5
% Real Growth
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Real Growth in GDP for the City of
Edmonton and the CMA
4
3
2
1
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Economic Trends and External Research
Edmonton CMA City of Edmonton
Risks and Opportunities
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Risks
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Growing discount for Cdn
oil leads to slow down in
investment
European financial systems
‘locks’ pushing US into
recession
Cdn housing market
stumbles reducing
consumer confidence and
spending
Sudden slowdown in
emerging markets
depresses commodity
prices
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Opportunities
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US recovery gains
momentum pulling up Cdn
exports.
Europe patches over
financial issues and returns
to faster growth profile
boosting global growth
China and other emerging
countries succeed in
stimulating more rapid
growth hiking global
commodity prices
What is the late night economy?
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235 licensed establishments open
after midnight.
Represent approximately 23% of all
licensed establishments in the City
Total estimated customer revenues in
2010 $467 million
Total estimated visits in 2010 – 20
million
Estimating the economic impact
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Based on survey data calculated total
revenues for the sector based on
average per seat values.
Developed a set of multipliers specific
to the City of Edmonton.
Estimated the direct and indirect
impacts by applying City specific
multipliers to the sector’s revenue.
Results for 2010
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Total impact on economic output $686
million
Addition to Gross Domestic Product
of the City - $310 million or 0.7% of
the City total
Wages and Salaries - $215 million
Full time equivalent jobs – 5,800 or
1.5% of total employment in the City.
Other key benefits of the sector
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A major source of entry level positions for
students and young people.
A support to special events such as the
International Jazz Festival Fringe Fest.
An important factor in attracting and
retaining young and mobile workers.
Significant ancillary impacts via patron
spending on retail, food, transportation and
other sectors
Q&A
John Rose
Chief Economist
Financial Services
4th Floor, Chancery Hall
Edmonton, Alberta, T5J 2C3
(780) 496-6070
[email protected]