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A pumpjack draws oil underneath a canola field in Cremona, Alta., on July 16. Financial research firm Morningstar Inc. noted that the price of oil has remained near multiyear highs despite the rise of the Delta threat, implying that global demand has been unshaken.Jeff McIntosh/The Canadian Press

There’s no question the Delta variant is a troubling new development in the COVID-19 crisis. But after nearly a year and a half of pandemic, it looks like the global economy has built up a fair amount of immunity.

The rollout of vaccines, along with significant adjustments by businesses, consumers and policy makers, has meant the economic impact of each wave of the virus has been softer than the last. While it’s still early, there are hopeful signs this trend will continue as we navigate the Delta wave.

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Certainly, the infection statistics in many parts of the world are unnerving. The global rate of daily new cases has almost doubled in the past six weeks. Even in countries with relatively high vaccination rates – such as Britain and the United States – the Delta variant has spread rapidly. Canada may soon be headed down the same path, which could lead to a retightening of requirements for physical distancing and wearing masks – or, at least, a delay in easing them further.

But while the infection charts have looked worrisome, the economic charts, so far, have not.

On Wednesday, the latest JPMorgan Global Composite Purchasing Managers’ Index (PMI) – an important gauge of worldwide business activity – showed only a modest dip in July from the recent booming levels fuelled by widespread reopenings in the spring. Financial research firm Morningstar Inc. noted that another key bellwether of the global economy, the price of oil, has remained near multiyear highs despite the rise of the Delta threat, implying that global demand has been unshaken.

In the United States, where the seven-day average new case count has soared from 12,000 a day to 85,000 in the past month, the PMIs for the manufacturing and services industries continued to increase from already historically high levels.

Of course, there’s always a bit of a time lag in economic data; even the relatively timely PMI reports are somewhat backward looking. That makes interpreting them somewhat problematic in fast-changing conditions such as those we have today with the Delta variant. Nevertheless, there has so far been little evidence of a serious dent in demand.

The worst you can say is that Delta, on a global scale, has fed a modest slowdown in an economic pace that would be fairly described as unsustainably booming. Given that the surge in demand in this spring’s reopening had severely strained global supplies for a wide range of goods, a bit of a pause – for whatever reason – is not the worst thing that could have happened, from a strictly economic perspective. A temporary cooling of demand amid Delta concerns could give strained supply chains time to catch up.

As to whether this pause might quickly balloon into something bigger, the experience of Britain – where Delta-fuelled case counts peaked in mid-July, and are on the decline again – may be instructive. British retail sales remained strong through June and July, barely missing a beat despite the rising health concerns.

A key reason for that may be the very different overall health implications of the Delta wave compared with earlier waves, especially those that predated mass vaccinations.

In a report this week, RBC Capital Markets chief currency strategist Adam Cole noted that even when Britain’s Delta surge was at its worst, the rate of hospitalizations had only risen modestly, and was about 80 per cent lower than during the similarly big wave of infections in December and January.

“As a test case of how a highly vaccinated country stands up to the Delta variant becoming the dominant strain, the U.K. data are very encouraging,” Mr. Cole said.

One implication for Canada, a country with even higher full-vaccination rates than Britain, is that a rise in Delta-variant cases may not place the same strain on the health care system – and therefore may not require anything like the restrictions we saw in previous waves of the pandemic. Thus, the impact on economic activity stands to be more muted.

That said, one big economic implication of the Delta wave is that those segments of the economy that have borne the brunt of the pandemic may have to suffer a little longer. Specifically, the variant threatens to keep a lid on international travel and tourism, as border restrictions will likely remain in place longer than travellers and business operators had hoped. Other businesses dependent on hospitality and entertainment may face further delays in returning to normal.

For Canada, that suggests prospects for a full return of employment – a critical element in the economic recovery – will be on hold a little longer. Statistics Canada data indicate that these hard-hit sectors alone account for more than 300,000 jobs lost to the pandemic, or more than half the country’s total employment losses versus prepandemic levels.

The labour market can’t possibly recover until pandemic impediments are largely cleared from these sectors. Which means, by extension, the Delta variant could push back the economic recovery by at least a few weeks, possibly a few months.

But the evidence suggests this need not be a major setback to the recovery. We’re probably talking about a tapping of the economic brakes, not a slamming of them.

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