Leisure and Hospitality Trails in Service Sector Recovery

The U.S. service sector, the biggest contributor to the country’s GDP by far, continued its recovery from the adverse effects of the COVID-19 pandemic in the second quarter of 2021. That’s according to advance estimates from the U.S. Census Bureau’s latest Quarterly Services Report, which indicates that services revenue increased by 4 percent on a seasonally adjusted basis, reaching $4.37 trillion in the three months ended June 30.

Looking at individual industries, it becomes clear which sectors are still affected by the pandemic’s lurking effects. While total services revenues exceeded pre-pandemic (Q2 2019) levels by 8.5 percent last quarter, two subsectors of the leisure and hospitality supersector still trail behind 2019 levels by a significant margin.

While all other sectors included in the Quarterly Services Report have returned to growth compared to Q2 2019 (sector-specific is not seasonally adjusted in the advance release), accommodation and arts, entertainment, and recreation trail pre-pandemic revenue by 14 and 18 percent, respectively. On a positive note, both sectors have seen revenues nearly double (arts, entertainment, and recreation) or triple (accommodation) compared to last year’s June quarter, as U.S. consumers were ready to return to normal prior to the surge of the Delta variant.