In this week’s The Seven…

• Population boom - People keep coming to Alberta
• The young and the many - Record migration slows (but does not reverse) aging
• Lower gear - Canadian growth engine sputtering in Q3
• In case there was doubt - Macklem’s speech puts spotlight on growth
• Opening the door - Economic contributions of Indigenous Peoples in Alberta
• Interesting Fact: Working remotely…from another province
• Chart of the Week: Where did all the natural increase go?
• Next Week: A new outlook…on the Alberta Economy

A slew of demographic data arrived this week and we’re taking full advantage of it. We hope you enjoy this demographics-focused version of The Seven.

Pulling ahead - Alberta continues to lead in population growth

As we reported Wednesday, there are few signs of slowing in Alberta’s population. Alberta’s 4.4% increase in 2024 led all provinces, with Ontario second at 3.2%.

We see Alberta’s population growth slowing to a still solid 2.5-3% next year with a pullback in non-permanent residents and some moderation in interprovincial inflows.

Alberta’s population numbers have been shockingly strong and more persistent than we forecast in June. We are running and re-running our forecast based on the latest data (our macromodel is overheating if you see steam coming from downtown Edmonton), and plan to release a new forecast next week.

But even with the moderation, population growth will stay hot by historic standards. Alberta’s population is on pace to surpass the 5 million mark next year, putting continued pressure on everything from housing, infrastructure, retail sales, and labour force entry.

Two-thirds of everything

Canadian demographer and economist David Foot famously said demographics can explain “about two-thirds of everything” in his book, Boom, Bust and Echo, released in 1996. It’s a classic that showed with great accuracy what happens when the massive baby boomer cohort ages, with implications for everything from consumer spending to seniors homes to school enrolment.

Demographics can offer strong predictive power. We know who is here today—their ages, genders and where they live. We can then age people forward, with reasonably predictable patterns of what people do when they reach certain ages (e.g. have children, buy homes, seek more medical services, etc.).

Of course, few could have foreseen the pandemic, which caused population growth to slow to a crawl, nor the subsequent population boom in Canada over the last three years.  But the longer-term aging forces Dr. Foot describes still hold today.

Slowing, but not reversing aging

One of the fascinating components of the migration boom is the impact on the age structure of the population. Migrants are very young, much younger than the overall population. Years of strong migration into Alberta has contributed to a younger demographic: the share of the population 65+ was 15.2% in Alberta (lowest among provinces) vs. 18.9% nationally as of July 1, 2024.

During the 2023/24 census year,* 79% of net migrants in Alberta were under the age of 40, compared to only 53% of the overall population. In other words, the new growth in the population is primarily young people, particularly those in the 15-34 age bracket (see the charts below). The median age in Alberta actually fell slightly this year for the first time since at least 1972 (earliest comparable data).

*July 1, 2023 to June 30, 2024   

Underwhelming - softer GDP growth reinforces need for more rate cuts

After showing signs of life, Canadian growth is on track to slow in the third quarter of this year. Today’s 0.2% July GDP growth rate was OK, but the advance August reading is flat.  Some of the August weakness reflects the rail strike, which is showing up in other data like wholesale trade, and should return.

All told, growth is on track to come in below 1.5% (annualized) this quarter—below the Bank of Canada’s forecast of 2.8% and a slowdown from Q2’s pace of 2.1%.

A nice segue into our next topic…

Appetite for growth - Bank of Canada wants to see economy pick up

In case there was any doubt on what’s on the Bank of Canada’s mind, Tiff Macklem's speech this week highlighted the latest concern: growth—there’s not enough of it.

They are pleased to see that inflation in Canada has fallen (now bang on the 2% target as of August). Now if only growth can improve so inflation doesn’t fall too much (that’s right, the Bank has flagged the ‘too much’ risk).

Here are a couple quotes from the speech:

“...we want to see economic growth pick up to absorb the slack in the economy.”

“Economic growth picked up in the first half of this year, and we want to see it strengthen further so that inflation stays close to the 2% target.”

Macklem goes on to say that more recent growth appears to be slowing, which is consistent with today’s GDP report.

Bottom line: Inflation is under control, and now the Bank is looking for growth to improve to mop up the excess slack in the economy.  The direction for the policy interest rate is clear: down. It’s a matter of pace, and we feel that another decline in inflation in September would tilt the odds in favour of a 50-basis point cut next month.

Outside Canada this week…

China announced a new stimulus package aimed at shoring up its wobbly economy hurt by a major property downturn. It includes lower reserve requirements and lower short-term interest rates, along with measures to reduce borrowing costs on mortgages and relaxed rules for second home purchases.

The Financial Times reported that Saudi Arabia may abandon its unofficial $100 oil price target to increase market share, and Bloomberg is now reporting they are committed to increasing production in December. This, along with news that production may come back in Libya, pushed WTI back below US$ 70/bbl in late week trading.

The door to opportunity - the Indigenous economy in Alberta

On Wednesday, we profiled a new report by ATB and MNP on the Indigenous economy in Alberta. It finds that Indigenous Peoples contributed more than $9 billion of GDP to the Alberta economy in 2023. While progress has been made, the report highlights a number of gaps and discusses opportunities for achieving full economic participation for Indigenous Peoples.

Interesting Fact…Working remotely…from another province

One of our theories for the surge in interprovincial migration to Alberta is remote workers. If more people can work from home, why not do so from another province, especially if the cost of housing is cheaper than say Vancouver or Toronto? Our report on interprovincial migration showed that Alberta indeed has a higher proportion (relative to its population) of out-of-province remote workers.

But more recent data, obtained through a special tabulation from Statistics Canada show that the number of out-of-province remote workers have declined since 2022. As of June 2024, there were an estimated 35,300 Alberta residents aged 15-69 who worked most of their hours from home for an employer in another province. That’s down from 41,800 in June 2022 (also obtained through a special tabulation).

This is not to diminish the increased importance of out of province remote work. Across the country, there were 167,200 employees working from home and reporting to an employer in another province or territory in June 2024, up from only about 12,600 in 2016. But with interprovincial migration holding strong and remote out-of-province workers declining, it is only one small part of the migration story. 

Chart of the Week: Where did all the natural increase go?

With Canada’s population soaring, most of the attention has been on immigration. There’s a good reason for that. International migration (including temporary residents) accounted for nearly 99% of Canada’s population growth in 2024 (year ending July 1). Or in people terms, 1.19 million of the 1.21 million people added to the country were newcomers.

The remainder is what demographers call ‘natural increase’, simply measured as births minus deaths. The numbers are small and shrinking, thanks to an aging population and declining total fertility rates, which hit an all-time low in 2023. Natural increase peaked in 1959, with the downward trend accelerating after 2009.

The national numbers mask a great deal of regional variation, mainly reflecting different age structures. There was a 15,292 national population gain through natural increase in 2023-24, and this was exclusively driven by four provinces (Alberta, Ontario, Saskatchewan and Manitoba) and the territories as shown in our Chart of the Week. Natural decline was experienced in B.C. and Quebec and each of the Atlantic provinces. For the first year on record (at least back to 1971), Quebec recorded more deaths than births in 2023-24, while B.C. has been experiencing natural decline for the last three years.

How much is natural increase contributing to population growth? The numbers are small, and vary significantly across the country. In Alberta, natural increase added 0.3 percentage points to the province’s 4.4% population growth in 2023-24. That may seem small, but that’s higher than any other province, with Manitoba second at 0.2 percentage points. On the other end of the spectrum, births minus deaths subtracted 0.6 percentage points from population growth in Newfoundland.

Answer to the previous trivia question: According to the Canadian Medical Association, it takes an additional six years of Royal College-approved training to become certified in neurosurgery in Canada.

Today’s trivia question: What percentage of Alberta’s population is currently aged 65 or over?