In this week’s The Seven… 

• Cracks widen - Trade war takes toll on Canada’s labour market
• Disrupted - U.S. container shipments from China 
• Westbound - Energy shipments to Asia surge
• Looking for work - Accommodating the influx of youth into Alberta
• Saudi impatience - OPEC turning on the taps
• Reshoring U.S. jobs? - Not so fast
• Thanks Mom! Mother’s Day spending
• Interesting Fact: Skills mismatch - Job opportunities in the trades
• Chart of the Week: Forever young - Youth flock to Alberta

“Mark, would you like to say a few words?” - President Donald Trump

“Thank you Mr. President, I’m on the edge of my seat.” - Prime Minister Mark Carney

We were all on the edge of our seats, as PM Carney had his first in-person meeting with the President on Tuesday. Fortunately, there was no ‘Zelensky moment’, and despite repeated 51st state threats, nothing new was added (though Trump did threaten tariffs on Canadian films earlier in the week). The Canadian dollar and S&P/TSX rallied on the day as traders bet that a tariff crisis may be averted.

We'll stay on the edge, with so much riding on next moves. What policies will the Carney government introduce to deliver on promises to “build the strongest economy in the G7” and make Canada an “energy superpower”? What will Trump do with China? Are more trade deals coming after Thursday’s deal with the UK? Will OPEC engage in a full-blown price war with the U.S.?

Today's Seven digs into many of these issues starting with today’s jobs data.

In flux - Trade war takes a bite out of Canada’s job market

The impacts of the trade war are showing up in the labour market. Businesses have turned more cautious on hiring and investment, and this is manifesting in another weak jobs report hot off the press this morning.

Canada’s unemployment rate rose 0.2 points to 6.9% last month, matching the rate from November 2024. Outside the pandemic period, this is the highest unemployment rate since January 2017.

The increase in unemployment came despite a modest 7,400 rise in employment, as more people searched for jobs, and failed to reverse a 32,600 jobs decline in March. Further, the April gain was flattered by federal election hiring as public administration jobs jumped 37,100.

The manufacturing sector, highly exposed to U.S. tariffs, suffered a 31,000 employment decline. The contraction was concentrated in Ontario’s manufacturing sector (-33,000), where layoffs have been announced at auto plants.

In Alberta, employment increased by 15,000 last month, but this reverses a similar number of job losses in March. April’s gain was led by services (13,700), with mixed performance in goods-producing industries (resource extraction down, manufacturing up). Overall employment has leveled off after a surge in late 2024.

Alberta employment was still up over the last year in April, by 2% vs. 1.3% nationally, and the province has consistently outpaced the rest of the country since October 2023. But job growth has slowed, which combined with still rapid labour force entry and migration is keeping the unemployment rate elevated. Alberta’s unemployment rate held steady at 7.1% last month.

Our March forecast projects a marked slowdown in annual employment growth in 2025 to 1.4% (vs. 3.4% last year) and a higher unemployment rate of 7.6% (vs. 7% last year). Our forecast is consistent with recent business surveys showing a pullback in hiring intentions and the softer global economic backdrop.

Disruption - U.S. container shipments from China plunge

The U.S. Federal Reserve chair Jerome Powell has talked about the hard data on the U.S. economy looking pretty good. But that data tends to be lagged, with leading indicators like consumer confidence pointing to more trouble ahead. More recent daily data shows that tariffs are disrupting U.S. trade.  

According to Vizion, cargo shipment departures from China to the U.S. have halved since Trump imposed 145% tariffs on April 10. This is an early sign that tariffs will raise prices and create shortages, something the Federal Reserve will no doubt be watching closely.

Westbound - Energy shipments to Asia continue surge

It’s still a small drop in the bucket, but shipments of Canadian crude oil to Asia continue to surge.

As we discussed Wednesday, this is due to the Trans Mountain Expansion which has enabled Canadian crude oil exports to China to rise from zero to an average of $340 million per month since the pipeline entered commercial operations in May last year. Overall, progress is being made in reducing reliance on the U.S. market. We’ve already seen it with crude oil and propane shipments to Asia, and we expect further gains this year with LNG Canada phase 1 starting up soon.

But, as we said, there is plenty of room for improvement. In March, 90% of Canadian oil and natural gas industry exports still flowed to the U.S.

Looking for work - Accommodating the influx of youth

Why has the youth unemployment rate increased in Alberta? At 17.2% in April, the unemployment rate among 15-24 year olds is at the highest level since the pandemic.

Looking at the employment data, this may be surprising. Employment growth for this age cohort is up 6.6% so far this year, outpacing that of older Albertans.

The answer is the rapid growth in youth seeking jobs. As the chart below shows, year-over-year growth in Alberta's youth labour force (those working or looking for work) has been brisk, generally outpacing employment growth. 

While the monthly data are highly volatile (and should be interpreted with caution), the recent trend shows that the level of youth employment has dipped from its January peak, while the youth labour force has continued to rise.

Why is youth entry to the labour force surging? International and interprovincial migration to Alberta is occurring across all age groups, but is highly concentrated in the younger demographic. Last year,* 79% of net migrants to the province were under the age of 40. Zooming in further, 22% were between the ages of 15-24—well above youth’s 12% share of the overall population. Alberta was, by far, the largest net recipient of youth from other provinces last year (see Chart of the Week).

So while youth employment has risen compared to last year, competition for those jobs has increased. Longer-term, challenges include increasing youth labour force participation and equipping youth with skills for jobs in demand (including in industries experiencing shortages like the trades—see below). 

*Based on census year 2024 (July 1, 2023 to June 30, 2024)

Turning on the taps - OPEC less patient

Saudi Arabia is not willing to do all the lifting to rebalance the oil market, especially as other OPEC countries (like Kazakhstan) exceed their limits.

On Saturday, OPEC+ agreed to accelerate oil production hikes for a second consecutive month, by 411,000 barrels per day (bpd) in June.

The change in OPEC’s stance, combined with global recession fears, have pushed WTI oil prices below US$60/bbl. According to ATB Capital Market’s Waqar Syed, current prices should rebalance the market as U.S. shale production slows. We are now tracking WTI at US$60-65/bbl average for the year, down from our March forecast of $68/bbl.  

How will the industry respond? It’s still early, but Suncor announced this week it will trim its 2026 capital budget if these prices persist. We now expect oil and gas extraction sector capital spending to be flat or decline slightly in 2025, a small downgrade from our already conservative March forecast.

Keep in mind, however, that the industry is battle-tested and has maintained capital discipline amid a series of shocks over the last decade. Conventional spending is more at risk, with oil sands spending mainly focused on sustaining capital. A lower oil price if sustained will shave from capital intentions, but is expected to have a much smaller impact than previous cycles (e.g. 2008-09 and 2014-15).

Thanks Mom! Mother’s Day spending

To commemorate Mother’s Day, ATB Economics is offering up a chart showing how much Albertans spend on entertainment and dining out on Mother’s day using daily ATB consumer Mastercard transactions data (the ATB Consumer Spending Tracker). 

Sunday is not a busy day normally, but it is on Mother’s Day! As the chart shows, in the last two years, spending on Mother’s Day was 45% higher than the other Sundays in May.

Money well spent, and a small token of our appreciation. Happy Mother’s Day!

Interesting Fact: Still wanted - Trades people

Those with a trade certificate are in demand. In the fourth quarter of 2024 (latest available), the number of job openings in the industry category “specialty trade contractors” was 6,550. That represents a job vacancy rate* of 5.2% compared to 2.9% overall in Alberta.

Job vacancies in Alberta have come down from their 2022 peaks, as migrants have helped fill jobs. While there is more slack in the overall job market, there are pockets of shortages. The trades is one area where lots of job openings exist, perhaps not surprising given the homebuilding boom in the province. Other industries with high job vacancies include accommodation services (5.3%), food services (5.4%) and truck transportation (5.2%).

*The number of unfilled jobs as a share of jobs required. This is not seasonally adjusted.  In the chart, we seasonally adjust the estimates to facilitate comparisons over time.

Chart of the Week: Youth flock to Alberta

Alberta continues to attract people from other provinces, particularly from B.C. and Ontario.

What age groups are coming? The short answer is everybody—the young and the old. Indeed, Alberta gained more people than it lost across every age group last year.

However, the age distribution is highly concentrated among youth. As our Chart of the Week shows, Alberta added more people (by a long shot) than any other province in both the 15-19 and 20-24 age categories last year.

This has increased demand for housing, resulted in rapid labour force entry (see above), and will help keep Alberta younger than other provinces.

Answer to the previous trivia question: The Federal Open Market Committee of the U.S. Federal Reserve meets 8 times a year to review economic conditions and determine the appropriate stance of monetary policy.

Today’s trivia question: Which province had the highest employment rate among residents ages 15-24 in April?