Oil prices are below $50 per barrel and are expected to stay around this level well into next year. With mass layoffs in the Alberta oil sector, the rest of the economy is sure to be impacted very soon.
Calgary New housing starts are down 36.4% over last year so Calgary’s home builders are already feeling the crunch.
Home Renovation Companies
With a downturn in the economy, it’s no surprise that there is less demand for new home purchases, but what is the effect on home improvement companies. Home hardware stores tend to do better in down economies because people spend more money fixing up their current homes rather than upgrading. Does the same logic hold true for other companies in the home improvement sector?
Calgary Roofing Companies
It is my guess that Calgary roofing companies are not going to feel much pressure. If you need a new roof, you need a new roof. Holding off on replacing your roof could lead to much higher costs in the long run. I suspect Calgary plumbers, electricians and other essential services will also not be affected too much.
Kitchen and Bathroom Renovations
At the other end of the spectrum are non-essential upgrades like landscaping, kitchen renovations and custom cabinet companies. These firms are likely to be the first to feel the impact of the slowing Calgary economy as consumers delay these types of purchases.
Calgary Window Companies
Calgary window companies and other industries straddle a middle ground where the purchase may be needed, however could also be delayed if there is some economic uncertainty in the household. New windows and doors can be delayed a little, but if they are old, they will need to be replaced sooner or later.
Retail and Restaurant Businesses
Consumer focused businesses like restaurants and retail don’t seem to be affected yet. While thousands have lost their jobs in Alberta, there still seems to be plenty of work opportunities available. We might cut our personal expenditures a little but we all still want to eat out.
How will Calgary Ride Out the Economic Slowdown?
There is no question that oil has a huge influence on the local economy. The real issue will be how much the economic slowdown starts to trickle down to the rest of the economy. There are already drastic cuts in the oil sector and this has lead to a big decrease in new housing construction and home sales. The next market to look for will be the home improvement sector. If we start to see weakness in renovation and home improvement businesses than I’d take that as a sign that the economy is in for much more hardship.