Hospitality employment in the US slumped by 61,000 last month, in a surprise reversal for a sector that was expected to boom thanks to the World Cup. The decline, reported by the Bureau of Labor Statistics (BLS) on Thursday, came despite analysts’ predictions that the tournament — being jointly hosted by the US, Canada and Mexico — would fuel a hiring spree in bars, restaurants and hotels.
The May figures had offered early signs of a jobs boom, with bars and restaurants ramping up hiring to prepare for the World Cup. A Goldman Sachs report had even anticipated June would show the competition boosting employment by around 40,000 jobs. Instead, the growth went into reverse, even as travelling football fans reportedly drank bars across the US dry.
“US hospitality jobs fell by 61,000 in June, defying World Cup boom expectations, as overall jobs growth slowed.”
“Leisure and hospitality is a real area of weakness,” said James Knightley, chief US economist at ING. “It is a major surprise given the World Cup is on and bars and venues are busy. Admittedly, this sector had seen a 44,000 jump in May, but even so that is a surprising outcome.”
The broader picture was also bleaker than expected. Overall US employment rose by just 57,000 in June, lower than anticipated, while the unemployment rate dipped slightly to 4.2%. The BLS also made significant downward revisions to previous months, with the number of jobs created in April and May now 74,000 lower than originally thought.
Knightley said the lower-than-expected overall increase, combined with the downward revisions, suggested “the decent uptick in jobs over the previous three months is not necessarily the start of a new trend”. He added that the figures made an interest rate hike later this month less likely.
Susannah Streeter, chief investment strategist at Wealth Club, said the slowdown in jobs growth opened the door to a “Goldilocks scenario” for the US economy, where it could stay “not too hot, but not too cold”. “Expectations of multiple rate hikes are fading away, with only one hike now fully priced in, and not until next year,” she added.