But this time, there was a number in the jobs data that, on its face, stands out as being implausible: The leisure and hospitality sector lost 61,000 jobs in June, the BLS reported, even though the U.S. is hosting the single largest sporting event on the planet—the World Cup.
Is it really likely that dozens of soccer matches, followed by hundreds of thousands of domestic fans and foreign tourists, somehow resulted in fewer people being employed in hotels, bars, and restaurants?
Pimco economist Tiffany Wilding said the sector “was actually expected to benefit from World Cup hiring.”
RSM Chief Economist Joe Brusuelas said in an email that the report should be taken “with a grain of salt.” “Expect an upward revision to the top-line June estimate when the July data is released,” he said.
There is good evidence that the World Cup has juiced economic activity recently. This chart from Bank of America shows card spending was up 5.4% year-on-year over the group stage of the cup. “The boost is being particularly driven by ‘non-locals’ coming into the cities for the matches, whose spending was up 17.4%,” BofA Institute’s Liz Everett Krisberg and David Tinsley said in an email.
“The U.S. employment report was a convenient reminder not to put too much emphasis onto a single unreliable data release,” Paul Donovan of UBS said in an email this morning. “There were notable revisions, and the details showed swings in seasonal adjustments moving the figures in a rather maladjusted manner. The trends are still the same. In an uncertain policy environment, companies seem reluctant to hire, but are also not rushing to fire.”
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At EY-Parthenon, Chief Economist Gregory Daco was also taken aback by the weak hospitality number, although he stopped short of saying it might be wrong. “The biggest black eye in June came from the leisure and hospitality sector shedding 61k jobs—the largest decline since the pandemic—on weak seasonal hiring, despite the hype around the World Cup,” he said in an email.
Overall, the U.S. economy added 57,000 jobs in June, about half the number that was expected, the BLS reported yesterday. The Financial Times suggested that the surprisingly weak hospitality numbers explain why the consensus estimate was wrong:
“There may be a way to explain away the bad month, however. Employment in hospitality and leisure might have been expected to rise in June, in the run-up to the North American edition of the World Cup… But, strangely, the sector crashed hard, losing 61,000 jobs,” Robert Armstrong wrote.
“A statistical blip? It’s possible, and if you take out the hospitality losses, we would be talking about a nice four-month trend.”
The BLS was contacted for comment.
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