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Business Briefing The Canadian divide: Alberta’s oil loss and Ontario’s Wynne-win

These are stories Report on Business followed this week.

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The oil sands are shifting before our very eyes.

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Alberta, once the engine of Canada's jobs machine and home to the hottest housing market, is suffering heavy blows from the oil shock.

Ontario, once a high-profile laggard, is by some accounts on its way to leading the country in economic growth for the first time in some 15 years.

That shift highlights what economists say is a widening regional gap that will only get wider as the oil-producing provinces are hit by the collapse in oil prices, and the impact spreads beyond their borders.

Three reports this week underscored the change in fortunes: Economists changed their forecasts for the provinces, Statistics Canada reported the hit to the jobs markets in the oil-sensitive regions, and the Canadian Real Estate Association warned of what to expect in the housing market.

"The regional divide in near-term economic prospects was on show in today's report," Toronto-Dominion Bank economist Jonathan Bendiner said of Friday's reading by Statistics Canada of the labour market.

"Indeed, Alberta recorded the steepest decline in February, while Ontario and Quebec recorded the only gains in employment," he added in a research note.

"This regional divide is forecast to widen as continued weakness in the resource sector is expected to weigh on the economies of oil-producing provinces."

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As The Globe and Mail's Tavia Grant writes, the Statistics Canada report showed Alberta's jobless rate spiking to 5.3 per cent last month, from 4.5 per cent in January.

Unemployment in Newfoundland and Labrador climbed 1.2 percentage points to 12.6 per cent, and Saskatchewan's jobless rate rose to 5 per cent from 4.5 per cent.

More layoffs are coming in Alberta, warned CIBC World Markets economist Nick Exarhos, and "given the weakening demand for employees as the oil shock is felt in corporate spending plans, it'll be harder for Canadians to find salaried positions in 2015."

British Columbia, with links to Alberta, also suffered a higher unemployment rate, at 6 per cent from 5.6 per cent. Nova Scotia also saw a setback, which, according to senior economist Robert Kavcic of BMO Nesbitt Burns, "would reflect layoffs of commuting workers from other provinces.

Add to that the latest report from CREA, which projected on Friday that Alberta will see the steepest decline in home sales this year, of more than 19 per cent, and a 3.4-per-cent slide in house prices.

That, CREA said, will reflect a "pullback in sales for luxury properties compared to homes in more affordable price segments."

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Ontario, whose jobless rate of 6.9 per cent is still well above that of Alberta, is suddenly on the upswing, supposedly buoyed by a weaker currency that has plunged in tandem with oil prices, lower energy costs and lower interest rates.

That softer loonie didn't filter through last month, as Canada's manufacturing sector actually lost jobs, but it's expected to at some point, particularly as it heads towards the 75-cent level, as expected.

Nonetheless, Ontario gained 14,000 jobs in February.

And Royal Bank of Canada, for one, expects Ontario's economy to expand by 3.3 per cent this year, leading the provinces for the first time since 2000, while Alberta sees growth of just 0.6 per cent.

While the number of jobs in Toronto slipped a bit from February of 2014, employment growth "continues to sizzle" around the Greater Toronto Area, said Mr. Kavcic, noting annual increases of more than 5 per cent in centres such as Barrie, Brantford, Guelph and Oshawa.

On the housing front, Toronto continues to score gain upon gain, though some fear a bubble.

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Home sales in Toronto rose by more than 10.5 per cent last month from a year earlier, and price gains are "the fastest among the major cities, Mr. Kavcic said, noting a surge of 7.8 per cent.

"While the slide in oil prices has derailed markets in oil-producing regions, the associated reduction in interest rates has only helped juice Toronto prices further," he added.

Alberta Premier Jim Prentice, who is heading into an expected election, is already moving fast to limit the damage to his finances. Though presumably he didn't win himself many friends when he said on radio that his people might "look in a mirror" so that they understand it.

His Ontario counterpart, Kathleen Wynne, of course didn't engineer the plunge in the dollar. Or the plunge in energy costs. Or the drop in interest rates.

And she's still staring massive deficits in the face. Net debt to gross domestic product is at about 40 per cent, second in the country only to Quebec. In per-capita terms, it's about $21,000, again second only to Quebec.

(But if you want to talk about a real Wynne-win, The Globe and Mail's Adrian Morrow and Marina Strauss report that she's considering allowing the sale of beer and wine in Ontario grocery stores.)

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