Hospitality Investing News - Southwest July 2024

Rising hospitality staff counts reflect restaurant performance. 
The leisure and hospitality sector added 42,000 roles in May, including 25,000 positions at food service and drinking places, displaying restaurateurs’ confidence in current consumer demand. While some popular restaurant chains have announced recent store closings, the sector is in a strong position overall. Bars and restaurants recorded greater yearover-year retail consumer spending increases than the retail sector overall in April, and vacancy at such establishments nationally has held at a low 3.7 percent rate for 18 straight months through March. In the wake of strong employment data, market expectations lowered for both a June or September interest rate cut. Still, there are other signs that conditions are nearing the Fed’s goals, including falling job openings, sub-3 percent yearover-year Core PCE inflation and slower economic growth in the first quarter. The Sahm Rule, a potential recession indicator, could also come into play. According to this, the early stages of a recession occur when the three-month mean unemployment rate rises above its 12-month low by at least 50 basis points. While not true in May, if unemployment were to rise again next month, it would meet the technical definition of the rule.