The US eating & drinking out sector is creating a rising number of jobs - but how long can it last, asks Dominic Rushe, US business correspondent for The Guardian.
Jobs. A four letter word that come November will no doubt decide whether President Barack Obama gets a second term.
For the past six months at least the US economy has been looking - whisper it - almost like it is really on the mend. But then at the start of April came a surprise. After five months of delivering 200,000 plus new jobs a month, the US economy seemed to have stalled. In March, the Department of Labor declared, the US had added 120,000 new jobs. That’s half what it had added in February - and far less than anyone had been expecting.
Retail sales were hit hard, the Government continued to sack people, other sectors slowed. But hidden in the bad news were some further signs of encouragement for the US food industry. Employment in food services and drinking rose by 37,000 in March, according to the Department of Labor, and have risen by 563,000 since a recent low point in
February 2010. According to the National Restaurant Association (NRA), more than 200,000 of those positions were created in the past six months.
Restaurants are the US’s second largest private sector employer with a workforce of nearly 13 million - almost 10% of the US workforce. According to the NRA, the vast majority of restaurants are small businesses, with 93% of them operating with 50 or fewer employees.
Collectively, small businesses are the biggest employers in the US and lawmakers looking to encourage entrepreneurs have just introduced the Jumpstart Our Business Startups, or JOBS, Act, in a bid to make it easier for small businesses to raise capital and deal with financial regulation.
When those new businesses come on line, the US government will be hoping they will add to the more than 100,000 jobs the industry added in two consecutive quarters. That level of growth was a record, according to the NRA’s analysis of the Department of Labor statistics.
Eating and drinking places - which account for roughly three-quarters of the total restaurant and foodservice workforce - added 103,100 jobs in the first quarter of 2012, which followed a gain of 101,400 jobs in the fourth quarter of 2011. Current staffing levels are now more than 180,000 jobs above the pre-recession peak, according to the NRA, and likely to go higher.
According to the association’s monthly Restaurant Industry Tracking Survey, 24% of restaurant operators plan to increase staffing levels in six months. Just 7% said they expect to reduce staffing levels in six months.
The remaining 69% expect their staffing levels to remain about the same.
The Restaurant Performance Index (RPI) remained above 100 for the fourth consecutive month in February. The RPI - a monthly measure of the industry’s health - stood at 101.9 in February, up 0.6% from January’s level of 101.3. Any measure above M&C the 100 threshold signifies expansion. Market research firm Mintel Group is predicting that restaurant industry sales will increase 2.8% to $416.4bn (£261.77bn) this year, following just a 1.4% gain last year.
The association projects that the industry will add 1.4 million positions in the next decade, reaching 14.3 million. But in order for growth to continue, the US will have to get back on a firmer track. Ben Bernanke, chairman of the board of governors of the Federal Reserve System, recently warned that the recovery in the jobs market seemed out of sync with the wider economy. While the jobs market seemed to be adding 200,000 a month, the economy was still inching its way out of the trough, he warned.
Then came April’s disappointing news to rain on the parade. Part of the bounce back must in part be due to the frighteningly mild winter the US has enjoyed. One can’t help but wonder how long this bounce back in the restaurant industry can outstrip the malaise in the wider world. Someone’s got to tip all those waiters.