Strong jobs growth? Thank a tourist
WASHINGTON (Reuters) - The housing sector is in a funk, auto sales are weak, and manufacturing jobs are drying up. So why were Friday's employment numbers surprisingly strong?
Merrill Lynch analyst David Rosenberg says at least some of the credit should go to tourists who are flocking to the United States to capitalize on a weak dollar, helping to fill bars and restaurants.
"Where is all the employment being created? Try the leisure-hospitality sector -- the weak dollar has worked its magic in this space," Rosenberg wrote in a note to clients.
Friday's employment report from the Labor Department showed an overall gain of 132,000 jobs in June, beating economists' expectations for 120,000 in a Reuters survey.
Payroll figures for April and May were also revised higher, confirming stronger second-quarter economic growth following a soft start to the year.
Not surprisingly, nearly all the growth came in the services sector, which includes everything from nurses to bartenders and has been the sweet spot in an economy struggling with persistent weakness in manufacturing and housing.
Health care gets most of the attention in the services sector as aging baby boomers drive up demand for nursing, but a closer look at the latest numbers shows that food service and drinking places accounted for 34,600 new jobs in June, outpacing the 29,700 gain in health care employment.
"Foreigners cannot believe how cheap it is now to visit the U.S., with the U.S. dollar down 15 percent year-over-year against the Australian dollar and Thai baht; 10 percent against the (British pound) and 7.5 percent against the euro," Merrill's Rosenberg said.
While the data suggest that consumers were happily eating and drinking, the revelry did not extend to the shopping mall. The retail trade lost some 24,200 jobs, in part due to weakness at car dealerships and building supply stores but also because of declines at clothing and accessories stores.
"The mystery is they're adding folks in the food court and not the stores," said Ken Goldstein, labor economist with The Conference Board in New York.
Goldstein said that although the data is seasonally adjusted, it's not an exact science and the retail job losses may have as much to do with timing as demand.
He said restaurants probably beefed up staffing in response to signs the economy improved in the second quarter, and some people who had worried about a steep decline found reason to celebrate or travel.
Retailers are still a few weeks away from the back-to-school shopping season and will likely add jobs again in July, he said.