The September jobs report has surpassed expectations, with the leisure and hospitality sector leading the way. According to the Bureau of Labor Statistics, the U.S. economy added an impressive 336,000 jobs last month. Of those jobs, approximately 28% were in leisure and hospitality, making it the top industry in terms of job creation. This surge in hiring is a significant improvement compared to the average monthly gain of 61,000 over the past year.
One of the factors contributing to this growth is the high demand for services in sectors such as hotels and restaurants. However, these industries have been facing chronic staffing challenges. Despite this, they managed to add a remarkable 96,000 positions on a seasonally adjusted basis in September. The hiring spree in the hospitality industry has brought food services and drinking places back to their pre-pandemic employment levels, according to the BLS report. However, accommodation employment still lags behind February 2020 levels by approximately 10.3%.
Economists were surprised by the significant increase in jobs in the hospitality and leisure sector for September. Typically, this sector experiences more job losses than gains during this time as summer seasonal workers leave payrolls. Gregory Daco, chief economist at EY, explained that job growth in this sector had been slowing down in recent months, making this sudden surge even more unexpected.
There are several possible reasons for this increase. Daco suggests that the seasonal adjustment may be overly strong following the pandemic, failing to accurately reflect the realities of the post-pandemic labor market. Additionally, some employers may be retaining workers for longer periods due to challenges in recruiting new staff. Jim McCoy, senior vice president of recruiting firm ManpowerGroup, believes that higher interest rates and the resumption of student loan payments may be motivating households to seek additional sources of income.
Despite speculations about the impact of holiday season preparations on September’s hiring data, both Daco and McCoy agree that this is not a significant factor. While the sector does hire some seasonal employees towards the end of the year, summer is the primary hiring season. Additionally, holiday onboarding typically begins in November, so September’s figures would not reflect any increase related to holiday hiring.
Overall, the September jobs report demonstrates robust growth in the leisure and hospitality sector, outpacing expectations and defying recent trends. The increased demand for services, coupled with ongoing staffing challenges, suggests that this sector continues to play a crucial role in the recovery of the U.S. labor market.
The State of Holiday Hiring in the Retail Sector
As we approach the final months of the year, it is common to see a rise in job losses. Observers, however, should not jump to the conclusion that this signals a complete downturn for the hospitality and leisure industry, according to economists.
While the overall job landscape may appear grim, holiday hiring momentum is expected to be concentrated in the retail sector. Many companies have been moving up their holiday sales to early October and are eager to get a head start on their recruitment efforts.
Amy Glaser, Senior Vice President at staffing agency Adecco Group, explains that this time of year is when employers in sectors such as transportation, warehousing, and customer service begin ramping up their workforce for the holiday season.
In September, the retail sector added a staggering 19,700 jobs, a significant increase compared to the mere 400 jobs added in August. Major players like Target (Ticker: TGT), Amazon.com (AMZN), and Macy’s (M) have already announced their holiday hiring plans, with some job listings already posted. While Macy’s intends to hire fewer seasonal employees this year, Target is maintaining their hiring numbers from last year, and Amazon plans to onboard an impressive 100,000 more workers than in 2022.
While the growth in the retail sector may not be as robust as that seen in the restaurant and hotel industry, there are still optimistic hiring forecasts for seasonal workers. Many retailers believe they missed out on potential sales last holiday season due to understaffing, and they are determined not to make the same mistake again.
The September job report initially caused some concern among investors, who feared that it would prompt the Federal Reserve to further tighten interest rates. However, economists like Daco suggest that the report actually offers a mixed but favorable outlook. While job growth indicates a resilient economy, moderate wage growth means that increased earnings will not result in a significant surge in inflation.
Chris Todd, CEO of payroll software company UKG, also views the report as positive news for workers. He believes that employees, particularly those in front-line roles, are currently in a position of power. They can afford to be selective about the businesses they choose to work for.
In conclusion, the state of holiday hiring in the retail sector is poised for growth. As companies prepare for the holiday season, job opportunities are on the rise, offering workers a promising outlook.
