Ft McMurray Wildfire, Canada’s Most Expensive Natural Disaster
The raging wildfire in Alberta Canada will go down as the most expensive natural disaster in Canada’s history, damaging the environment, homes, businesses and the struggling economy in their path.
Recently released data suggests that activity in the Canadian Province was firming near the end of Q-1 as Crude Oil prices began to move above US$40 bbl.
Thursday, Statistics Canada reported that initial jobless claims for the province declined on an annual basis in March, the 1st such drop since October 2014.
Alberta’s manufacturing sector, which counts Crude Oil producers among its Key customers, had seen sales dive in the wake of the collapse in Crude Oil prices, factory sales have stabilized recently.
Total employment in the Province has also been flat since January:
Retail sales point to persistent weakness in the Albertan economy. Consumer spending in the nation’s Crude Oil-producing heartland has shown no sign revival in the Quarter.
Many Key Alberta data points are falling on a Y-Y basis, including manufacturing sales and retail sales, but they are falling less sharply than in Q-4 of Y 2015.
Those 2nd derivative improvements are the Green Shoots of a stabilization in economic activity. The wildfires blazes may have also caused real harm to the Province’s nascent economic Green Shoots
“There’s no better example of the underlying firmness in the Canadian housing market than recent signs of stabilization in hard-hit Alberta, and in particular Calgary,” said the senior Bank of Montreal Economist. “After plunging almost 30% last year, existing home sales in the city are now sliding at a slower 10% Y-Y rate, while the decline in benchmark prices has steadied at 3.5% in the past 3 months.”
Economic activity in Alberta has been adversely affected by the inferno, now and in the months ahead.
The ongoing wildfire have reduced Crude Oil production by more than 1-M BPD, and continue to prevent a restart of operations at Oil sands facilities in and around Ft McMurray.
Getting a clear read on the state of Alberta’s economy will take a long time.
The wildfire created major distortions in the economic data in Q-2. These data distortions will make it difficult to confirm conclusively whether Q-1 stabilization was an improvement or just a pause in the Province’s economic decline.
Remember, when traveling and camping in Fire Danger Zones, take extreme care, your life, property and the economy of the community depends on it.
Have a terrific weekend