CALGARY - Alberta's boom will soften this year as weaker commodity prices, a tight housing market and labour pressures dampen the country's hottest economy, the Conference Board of Canada said Monday.
It predicted the province's gross domestic product, a measure of Alberta's economy, will grow by 4.1 per cent this year, compared to seven per cent in 2006, on less consumer and capital spending.
Alberta still comes out far ahead of the national 2.8 per cent GDP growth forecast by the research organization, and will continue to see a strong overall growth into 2008 as commodity prices strengthen.
"There is really no end in sight for expansion in Alberta,'' associate director Marie-Christine Bernard told a Calgary audience.
The oil-rich province again will lead the country in job creation, up 74,000 jobs in 2007, in all sectors but mostly resource and service-related work.
The numbers are down from last year's high of 86,000 - or 27 per cent of all new jobs in Canada - but still keeps unemployment at a 30-year low of 3.5 per cent.
The slowdown in Alberta's economy will be caused in part by a lack of prosperity cheques for Albertans to cash in. The conference board predicts consumer spending will soften to 3.3 per cent this year, from 4 per cent in 2006.
A substantial drop in natural gas prices last year will also be instrumental in cooling growth, Bernard said.
"Weaker drilling activity will overshadow the massive development of the oil sands, and actually lead to a small decline in non-residential investment,'' Bernard said.
Oil and gas companies chopped more than $3 billion off capital budgets to deal with falling prices, reducing drilling programs into 2007.
The cut is expected to result in reduced supply, which will push prices back up by 2008, according to industry projections.
Alberta's biggest challenge will be maintaining productivity because of the lack of skilled workers in almost all sectors, the board predicted.
"We are moving into a labour shortage economy,'' said Glen Hodgson, chief economist with the Conference Board.
"What you're living every day, this is just the beginning - it's only going to get more challenging going forward.''
Technology will be key to bridging the gap between warm bodies and work that has to be done, industry experts say.
ATB Financial has been investing $20 million a year over past five years to update their business processes, and accommodate the growing scarcity of skilled workers, president and chief executive Bob Normand said.
"This is not a temporary phenomena,'' Normand said.
"The (aging) demographics in Alberta are going to make it even more important to make the kind of investments we need to address the shortage of workers.''
Normand believes keeping people working longer, through phased retirement schemes, and bringing recently retired workers back into the fold, will be an important factor in meeting labour challenges.
Alberta's population will grow three per cent, compared to one per cent for the rest of Canada. However, high housing costs has already cut migration to the province.
In the third quarter of 2006, 25,000 people moved to Alberta. In the fourth quarter that number more than halved.
Improved economies in other provinces are keeping people home, the Board noted.
British Columbia, Saskatchewan and Manitoba will all experience stronger economies due to major construction projects and rebounding mining industries.
Ontario will see marginally improved economics as trade with the United States improves on a stronger U.S. economy, but the housing market will weaken and consumer spending cool.
Quebec's housing market will also cool, but the province's economy will grow as more than 60,000 workers will benefit from a retroactive pay equity settlement. Several large capital projects will add heat.
Atlantic provinces will bolster growth through mining and the energy sector, as well as major construction.
