Alberta Business Confidence Still Strong but Declining

The Alberta Treasury Branches Financial Sentiments Index for the last Quarter of 2008 in Alberta shows the province is still anticipating being busy and growing. But we are not as confident about the future as we used to be. Northern Alberta is significantly more confident (134.7 on the Index) than the south (122.2 on the Index) and that is an interesting shift.

Oil and Gas confidence has rebounded from their anxiety of the Royalty Review when they were below 80, meaning they were negative about the future. thay are now at 160 showing the sector's confidence has more than doubled. Construction has moved from a high of over 150 two years ago to a neutral stance of no growth now with an Index of about 100 today.

The seasonally adjusted Business Activity Index has dropped from a second Quarter high in 2006 of about 153 to 111 today. Things in Alberta are slowing down but still happening. Optimism is steadily declining from a high 2 years ago of 160 to128.5 today. Optimism is higher than actual activity of 111 these days. Optimism has also been steadily in decline but overall confidence in the Alberta economy is still vibrant.

There is about 6 months of work in the hopper for most sectors but the US and likely Canadian recession an US financial sector bailout is going to take a toll on business confidence and availability of risk capital financing. Alberta will feel the impacts less than others but we will not escape unscathed. That said, today only 6% of all Alberta business sectors anticipate a decrease in business activity next year. We shall see.

Hiring activity was at a peak of 150 at the end of 2007. It is down to 121.3 now. Alberta is still hiring but not a frenetically as before. The new hiring intentions are at 126.4 so the balance between actual hires and intentions means a more reasonable HR environment going forward.

The marketplace is doing it job and is responding to the past silliness of the unsustainable growth of the Alberta economy. The slow down is welcome. We need to catch our breath. The looming clouds on the world economy that is being caused by the American meltdown will be a factor that has not ye become part of the Alberta consciousness...but it will. I wonder what the results of the ATB survey will be next Quarter when we are starting to feel the early stages of that reality.