One of the job market's biggest engines is stalling
Inflation could be prompting some Americans to cut back on discretionary spending, leading employers to slow hiring.
The leisure and hospitality sector in the US faced a decline in July, marking the first monthly job loss since February, according to the latest employment data. Two major consumer-facing industries, leisure and hospitality, and retail, together shed 59,400 jobs. Leisure and hospitality, which includes restaurants, hotels, and entertainment venues, saw a further decline following a loss of 43,000 jobs in June and 3,700 jobs in retail.
This marks a shift from the sector's strong performance in 2021 and 2022, which had been one of the key drivers of job growth. The decline could be attributed to rising prices, with consumers opting to spend less on discretionary activities such as dining out and attending events. Inflation, particularly food inflation, has outpaced overall inflation, making going out less attractive.
Some consumers are turning to hosting gatherings at home, finding it more cost-effective. Despite the decline, some level of consumer spending remains, although lower-income households are facing affordability challenges due to high prices. Wage growth in July was weak, adding to the pressure on consumers. The upcoming release of July's inflation figures will provide further insight into the relationship between wages and prices.
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