A pizza the action

The August non-farm payrolls report for the US, released this morning, has set off some alarm bells. The economy added "only" 235,000 jobs in the month, well below expectations. It's hard not to conclude that those expectations may have been unduly influenced by the very strong results seen in the previous couple of months.  The July job gain was revised upwards to more than one million, a pace that was clearly not likely to be sustained for very long. In more normal times (remember those?) a rise of 235,000 would be considered respectable, especially as it served to bring the unemployment rate down by two ticks, to 5.2 percent. It's legitimate to wonder if the dreaded Delta variant may have a negative effect on the economy, but the speed with which economists have swivelled to adopt that as their base case scenario is surprising.  

This is yet another of those months in which Canada's jobs report comes out a week after the US. Canada's July jobs data were strong, but StatsCan reported just a couple of days ago (see previous post) that the economy actually shrank in that month. Since employment normally tracks behind changes in overall activity, does this mean we can expect a weak August jobs report next Friday? 

Maybe, maybe not. Economists are not supposed to rely on anecdotal evidence,  though it has been suggested that the plural of anecdote is data. But anyway, here goes. Last night we headed out to the  excellent pizza patio at one of our local wineries.  As I was parking the car I could see that there were lots of empty tables, and yet when we made it to the front of the short line at the door, we were told there would be a wait of at least half an hour before we could be served. As more patrons arrived, that wait moved up to 45 minutes, then a full hour. Many people simply gave up and left. 

We sat on a couple of stools at the bar and quickly saw that only about a third of the tables were in use, and there were only a couple of servers on duty. A chat with the manager confirmed that they were unable to find enough staff to open the place up completely. A survey of our local newspapers or social media groups would indicate that any number of restaurants in the region are facing the same issue, which must be disheartening for them as the busy tourist season starts to wind down. 

What does this imply for next week's official data? The puzzling combination of high unemployment and widespread labour shortages has been around for some months now, and may well show up again in the August numbers. There's not much solid evidence that continuing COVID-related income support plans are disincentivizing people from taking jobs, but depending on how the numbers come out, that could well become an important debating point in the final week of the election campaign.