The US economy added a robust 172,000 jobs in May, surpassing expectations, with a significant boost in leisure and hospitality jobs ahead of the World Cup. The Bureau of Labor Statistics reported that leisure and hospitality businesses created 70,000 jobs in May, with firms selling food and drink responsible for 48,000 of those. This jump is a significant increase from the average monthly gain of 14,000 for the prior year.
The jobs were created primarily in leisure and hospitality, local government, and healthcare, with employment in local government rising by 55,000 jobs and 35,000 jobs created in the healthcare sector. The overall unemployment rate held steady at 4.3%, while employment in the financial sector dropped by 22,000 jobs. The number of jobs created in March and April was also revised up by a combined 93,000, showing hiring was even more resilient than first thought.
World Cup Jobs Boom
The World Cup, jointly hosted by the US, Mexico, and Canada, is expected to draw large crowds, and businesses are preparing to meet the demand. However, there have been concerns raised that high prices may deter fans, with hotels warning of slow bookings and fans complaining about being priced out of the tournament. The issue has prompted an investigation by the attorney generals of New York and New Jersey into Fifa’s practices, with allegations of “artificially inflating prices” and “misleading fans”.
Economists say the strong jobs figures boost the chances of an interest rate hike by the end of 2026, while pointing to slowing wage growth as a sign household finances are increasingly under pressure. The average hourly earnings rose by 3.4% in the last year, while inflation is running at 3.8%, driven largely by soaring energy prices caused by the US-Israel war in Iran.
Economic Implications
The jobs report has significant implications for the US economy, with the boost in employment expected to continue despite rising costs facing businesses. However, the squeeze on household spending power is intensifying, with real household disposable incomes having fallen for three consecutive months and consumer confidence remaining close to all-time lows. Economists expect that a deal to reopen the Strait of Hormuz could lead to eventual rate cuts.
The strong jobs report is a positive sign for the US economy, but it also highlights the challenges facing households and businesses in the coming months. As the World Cup approaches, it remains to be seen whether the economic boost will be sustained, and how the high prices will impact fan attendance and the overall success of the tournament.
