Alberta's Economy Sizzles. The Rest of Canada's Fizzles

In Canada’s economy there’s Alberta, then there’s everywhere else. The oil- and gas-rich western province added 81,800 jobs over the last 12 months, while the rest of Canada lost 9,500. Canada’s jobless rate is 7.1 percent, Alberta’s 4.9 percent. Alberta’s trade surplus, C$7.4 billion ($6.8 billion) in May, almost matched the trade deficit rung up by all the other provinces. Growth in gross domestic product for Alberta, forecast at 3.5 percent this year, beats projected growth for the rest. The province is drawing thousands of young people, most in search of energy jobs that pay in the six figures. It has been “effectively the lone driver” of recent housing starts in Canada, the Bank of Montreal estimates. Alberta’s per capita gross domestic product will reach C$88,000 next year, C$35,000 more than the rest of Canada, Toronto-Dominion Bank economists predict.

The rise of Alberta poses a challenge to policymakers. Oil wealth has strengthened the Canadian dollar, battering exports by Ontario and Quebec, the two provinces traditionally at the center of the nation’s economy. Canada’s central bank is keeping interest rates near historic lows, helping to weaken the currency. The policy has boosted local demand, but the Canadian dollar is still strong enough to blunt industrial exports. Alberta oil producers are selling heavy oil derived from tar sands at $78 a barrel. Almost all their customers are in the U.S., where local per-barrel prices range from $90 to $106.