Foodservice Equipment Reports

Labor Day, Jobs, The Markets And A Record

The U.S. Bureau of Labor Statistics released its monthly employment report last Friday, Sept. 4. The U.S. economy created another 173,000 jobs in August. It was a bit below the average of the last year, but still decent. And combined with an upward revision of 44,000 jobs for June and July, jobs growth averaged 221,000 a month. Average hourly earnings also rose slightly for the second consecutive month, and the unemployment rate fell to 5.1%.

I remember Joe Pawlak, Senior V.P. of Technomic, telling me years ago that there is no more significant indicator of foodservice sales trends than jobs growth. The past year certainly has proved that to be true.

We’ve added more than 2 million jobs in the last 12 months, and restaurant sales have really, finally, recovered from the Great Recession. Even full-service operators, with or without alcohol, who had suffered through nearly a decade of traffic declines and weak sales, have benefited. Of course, the drop in gasoline prices that began a year ago has also helped. But believe Joe: It’s the jobs. And most leading economists expect the jobs growth to continue well into next year and beyond, although the rate of growth is expected to slow.

It’s important to keep these things in mind during times like the last three weeks, when the stock and other equities markets go blooey. The cliché is, “The stock market is not the economy.” It’s really true right now. The U.S. stock markets had not seen a serious correction since the end of the recession. Anyone paying attention knows it was due. And yes, it’s a global economy now, and when China gets a cold, others can get infected. But the Shanghai stock market had bubbled, doubling in valuation in the past year alone. China has issues with its “rebalance” from an export/infrastructure-based economy to a consumer-spending-driven one. But the Shanghai stock market is not the Chinese economy either. News reports and friends tell me the “regular” Chinese economy is still quite vibrant.

So let me give you some news that should really cheer you up. In the National Restaurant Association’s Restaurant Performance Index for July, the indicator that tracks the percentage of surveyed operators that made a capital purchase for equipment or facilities during the past three months hit the highest mark of the index’s 13-year history: 72% said they bought something. And the percentage that plan to make a purchase during the next six months, 66%, is also historically very, very high, although not quite a record for the RPI. There were a couple of months back in 2004 when the number was a point or two higher.

I don’t know how much better things are going to get—I’ve been saying for months that this might be the peak of the current cycle—but they are pretty good. Enjoy it.

And it being Labor Day weekend as I write this, enjoy having a job. There are still millions of our fellow citizens who don’t, mostly for structural reasons and not because they don’t want to do useful work. I’m grateful for mine. It is one of the best jobs in the world, and I feel very lucky.

Cheers,

 

Robin Ashton

Publisher

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