The Start Of A Comeback For Leisure & Hospitality

ADP got it wrong again which was good news for the economy. ADP said there were only 125,000 private sector jobs added, but there were 465,000 added in the BLS reading (beat estimates for 183,000). Ever since the pandemic started, ADP’s numbers have usually been very wrong. It’s clear to see the economy started to recover from its weak period due to the 3rd wave of the virus. Heading into this wave, we believed the slowdown would last from November to February. This is just the start of what should be explosive job creation in the next few months.

Overall, there were 379,000 jobs added which beat estimates for 175,000. Furthermore, last month’s reading was revised up from 49,0000 to 166,000. As you can tell, there were job losses in the public sector. That’s despite the fact that state and local governments have recovered tax collection following the steep drop in the spring. Manufacturing swung from a loss of 14,000 jobs to a 21,000 gain which beat estimates by 5,000. Construction was down 61,000 jobs. However, that was related to the bad weather. If it wasn’t for terrible winter storms, this labor report could have been even stronger.

February is the start of a new trend that will last us through the summer. That is the leisure and hospitality industry leading job creation. As you can see from the chart above, it added 355,000 jobs last month. This is just the beginning of the job creation that is to come. This will hurt wage growth because these are low paying jobs. However, we aren’t concerned with this weighting effect. The hope is these workers start to get raises because they will be in such high demand. A huge burst in eating out and lodging could help low income workers while Congress dithers on whether it will hike the minimum wage.

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