A report released by ATB Financial says Alberta’s economy is off to a shaky start and analysts predict the energy sector will likely see more layoffs before the end of the year.

The Alberta Economic Outlook for the first quarter was released on Thursday and the overall message is that the first half of 2016 could be the hardest yet as the economic downturn continues.

“It's going to be a tough 2016 for a lot of people in Alberta, however we are expecting that the first half of 2016 is going to be the roughest of this downturn. We are still anticipating that oil prices, a modest recovery by the end of 2016, and we think that the economy, some of those clouds of gloom are going to lift off the province on the second half of 2016 and towards the end of the year,” said Todd Hirsch from ATB Financial.

Oil prices have been pushed to 12-year lows and ATB says that kind of price environment will discourage new investment and spending and weigh down employment in most sectors of the province.

“As we move into 2016, excess global supply from OPEC producers coupled with uncertainty in China, Europe and the Middle East will continue to weigh on oil prices,” said Hirsch, “This will lead to even greater stress on the balance sheets of the province’s energy producers as they struggle to reduce costs.”

ATB says oil prices are not expected to recover until late 2016 and that the petroleum sector and related industries will continue to shed labour, pushing up the unemployment rate, which will be above 7.5 percent by spring but will likely not rise above eight or nine percent.

“Our labour market will remain challenged, including the loss of some labour to other provinces. But hiring in other sectors will help to offset job losses, though in some cases, these will be lower-paying jobs,” said Hirsch.

Analysts say the most likely scenario is that oil prices will stay at $30 - $40 USD for the first part of 2016 and a modest recovery to $50 - $55 USD is likely by year’s end.

The report indicates that weak consumer demand will weigh on residential housing and retail activity, but should stabilize by mid-year.

In Calgary, house prices are down 2.6 percent year-over-year and analysts say they could drop four to six percent over the next year.

Real GDP is at -0.5 percent and despite the slow rebound in oil prices, will shrink less in 2016 than it did in 2015.

ATB says there were a few bright spots in the economic outlook and that other major industries, like agriculture, forestry and tourism, will continue to perform well as the weak Canadian dollar boosts tourism and helps Alberta’s exporters.

Record highs for cattle prices were set last spring and remain healthy due to demand and hog prices have gained some ground since the start of the year and remain stable.

To view the complete Alberta Economic Outlook click HERE or scroll the document below.