E Business Investment And Western Alienation

Canadian business construction spending reached a record high in August. In August the residential sector expanded 1.8% to $10.6 billion and the non-residential sector expanded 0.5% to $4.9 billion.

Indeed, the twelve-month real annual gain in August was a hefty 8.4%, and increases were recorded in each of the three main categories - industrial, commercial and institutional/governmental

Nonetheless, the strong expansion of Canadian business construction spending continues to be uneven across the country. In August the strongest expansions were recorded in BC, Ontario, and Quebec.

Alberta was an obvious important outlier from this otherwise optimistic portrayal of improving business investment spending.

In fact, non-residential investment in Alberta has been contracting in real terms since 2014.

Alberta suffered from a deep resource-based recession in 2015 and 2016 and real business investment in the province is expected to fall again this year — its fifth consecutive year of contraction.

The Conference Board forecasts that Alberta's real GDP growth will slip to only 1.3% this year, trailing every other province in Canada. 

Alberta will record only minimal economic growth this year because the province is still absorbing the negative effects of oil production cuts and depressed energy investment. About the only positive thing, one can say about the 2019 outlook is that Alberta’s business sector contraction may be nearly over.

It is widely understood that the transportation problems of selling its crude oil in a generally weak oil market is a key cause of “western alienation” in Canada. Western political resentment is heavily centered in Alberta, though it is also quite prominent in Saskatchewan.

Western alienation has also been spurred on by the fact that in the recent federal election Saskatchewan and Alberta elected only Conservatives to Parliament and shut out the ruling Liberal party from these two provinces. 

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