Hope of a jobs bonanza from the football World Cup in the United States has been dealt a blow, with employment in restaurants, bars and hotels falling sharply in June despite the tournament being in full swing.
The US economy added just 57,000 jobs overall last month, well below expectations, while the unemployment rate edged down to 4.2%, the Bureau of Labor Statistics reported on Thursday. But the leisure and hospitality sector – the industry most likely to benefit from World Cup crowds – lost 61,000 positions, a stark reversal after a surge of hiring in May.
“US hospitality jobs fell by 61,000 in June, defying World Cup boost expectations.”
Analysts had widely predicted a boost from the tournament, which is being co-hosted by the US, Canada and Mexico. A Goldman Sachs report had forecast that the competition would add around 40,000 jobs to June's figures. Instead, the growth went into reverse.
“It is a major surprise given the World Cup is on and bars and venues are busy,” said James Knightley, ING's chief US economist. “Admittedly, this sector had seen a 44,000 jump in May, but even so that is a surprising outcome.”
The June jobs report also contained significant downward revisions to previous months: the number of jobs created in April and May is now 74,000 lower than originally thought. Knightley said the combination of the weaker-than-expected June increase and the downward revisions suggests “the decent uptick in jobs over the previous three months is not necessarily the start of a new trend”.
He added that the figures make an interest rate hike later this month less likely.
Susannah Streeter, chief investment strategist at Wealth Club, said the slowdown in jobs growth opens the door to a “Goldilocks scenario” for the US economy, where it stays “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 said.
The unexpected decline in hospitality jobs came despite reports of travelling football fans drinking bars across the US dry – a sign that even a global sporting event cannot guarantee a sustained jobs boom.