Alberta's economy is still expected to lead the country in growth over the next two years, according to the latest forecast from TD Economics, but the report warns that doesn't mean jobs will suddenly come surging back to the province.

"This year's top performing economies, B.C. and Ontario, are expected to lose some momentum thanks to a cooling in the housing market, while Alberta and Saskatchewan head to the top of the leaderboard," the report reads.

"But, this will be bittersweet, as the job markets in these oil-producing economies are expected to remain soft, leaving unemployment rates historically elevated."

The report, released Tuesday, reaffirms the TD Economics' September forecast that Alberta would see the largest real GDP growth of all provinces in 2017 and 2018.

The latest data indicates "real activity in the Alberta and Saskatchewan economies has stabilized amid an uptick in crude oil prices," according to the December report.

Alberta's growth forecast is pegged around two per cent for each of the next two years — relatively modest by historical standards, but still ahead of the rest of the country.

Alberta is expected to see the strongest GDP growth over the next two years, according to the latest TD Economics provincial outlook. (TD Economics)

The "massive" reductions in capital spending in Alberta's oil industry appear to have reached bottom and further declines in investment are "unlikely," according to the report, and there is some evidence the trend is starting to reverse.

"Two expansion projects in Alberta that had been shelved when oil prices initially plunged are set to be revived, with the producers citing lower costs as the main reason for the reversals," the report reads.

The recent federal approvals of Kinder Morgan's Trans Mountain and Enbridge's Line 3 pipeline projects "also pose some upside potential for investment, production and overall economic growth down the road," the report adds.

But while "there is light at the end of the tunnel" for oil-rich provinces like Alberta, the report cautions "it will take some time to filter through to the job market."

"Employment is a lagging indicator, and conditions in the oil-producing regions appear to have deteriorated in recent months, with the unemployment rate shooting up in all three provinces," the report reads.

"Newfoundland & Labrador's is the highest in the country, while Alberta's is currently sitting at the highest level seen since 1994, and Saskatchewan's is at a 17-year high."