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Friday, May 7, 2021

Data Versus Anecdotes...

Employment data surprised to the downside in Canada and the United States. In Canada's case, this likely reflected lockdowns mandated in a pair of large provinces. This softness did not match up to the anecdotes of tight labour markets, with low-wage employers in the United States being forced to greatly raise wages to attract workers.

My view is that this just reflects short-term effects: people do not want to take jobs that pose infection risks. However, with the rollout of vaccinations in North America, this effect will fade. I do think there is some sectoral tightness that might cause an upward bump in wages, but I would be cautious about over-reacting to that. Since I am not in the business of short-term data forecasting, I am not in the position to dig into this. Even if I were, my bias would be that these effects will fade, so there is no point extrapolating the trends of a few months in 2021 out for multiple years.



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