SOCCER PUNCH
My Monday post argued that the recent rise in US employment data was largely due to preparations for World Cup events in 11 US cities. Goldman Sachs documents how previous similar events impacted the economy.
Payroll employment rose 80k above trend in host cities during the 1994 US World Cup and 40k on average during past Summer Olympics in the event months, before largely reverting to trend in the following months.
Job gains during the events were concentrated in leisure and hospitality, retail trade, and transportation, while professional and business services hiring tended to accelerate in the months preceding the event to support logistics and operations.
Consistent with this pattern, business services employment in the 11 host metropolitan areas rose about 20k in each of March and April [2026], while it was little changed in the rest of the US. While city-level data are not yet available for May, some of the strength in May payroll growth might also have reflected hiring ahead of the World Cup.
To estimate the impact of the 2026 World Cup on payrolls, we scale up the trajectory of job gains observed around the 1994 tournament by roughly 30% to reflect the larger number of matches and attendees. Accounting for some hiring that has likely already occurred through May, we estimate a boost to monthly payroll growth of 40k in June and 10k in July, followed by a 15k drag in August as temporary positions wind down, with further gradual reversals throughout the rest of the year.
Economic activity should receive a modest boost from the tournament. Spending on food and beverages by foreign tourists, domestic tourists, and locals will boost retail sales, which does not distinguish between spending by residents and foreigners. In the GDP statistics, all spending by domestic fans will boost consumer spending, and spending by foreign fans will boost exports of tourist services.
Drawing on estimates from the US State Department, FIFA, and Tourism Economics, and assuming that roughly two-thirds of World Cup-associated arrivals represent net additive inflows—with the remaining one-third displacing other tourism due to capacity constraints and elevated prices in host cities—we estimate that foreign arrivals will run ½-1mn above trend in June and July.
The “Little Excursion”
China’s Inflation Split Widens as AI, War Stir Up Factory Prices
The consumer-price index climbed 1.2% from a year earlier, rising at the same pace as in the previous month and missing the median estimate of 1.3% in a Bloomberg survey of economists. A 16% plunge in pork prices had a 0.3 percentage-point drag on the CPI, according to data published by the National Bureau of Statistics on Wednesday.
Producer inflation accelerated to 3.9% compared with a year ago, matching forecasts and up from 2.8% in April. The core CPI, which strips out volatile food and energy prices, surprised by undershooting expectations and increasing 1.1%, slower than its 1.2% gain in April. (…)
But many consumer-facing firms are struggling to pass on higher raw material costs to buyers, which is hurting their profit margins. Years of weak demand and excessive supply have contributed to bruising competition among Chinese industrial firms that’s keeping a lid on consumer prices. (…)
Within the CPI, the cost of fuel for vehicles soared 21% in May from a year ago, accelerating from the 17% gain in April. Acting as an offset, prices of food, alcohol and tobacco dropped, extending their decline slightly to 0.9%.
Pork prices have been falling for almost two years now, as the pig farming industry struggles to clear overcapacity.
Other consumer items — ranging from clothes and housing to education, entertainment and health services — showed inflation flatlining or decelerating. The category of “miscellaneous goods and services,” which includes gold jewelry, also saw price increases slow after surging since late 2025, suggesting a fading boost from the bullion rally.
“Food and property prices are helping suppress headline inflation for now,” said Lynn Song, chief economist for Greater China at ING Bank NV. “But rising prices more broadly suggest we’re moving from deflation into a low inflation environment.” (…)
As a result of more expensive components, prices for communication equipment under the CPI — including smartphones — climbed 7%, accelerating from 4% in April. Home appliances prices also picked up.
“The acceleration of electrification, the deep integration of artificial intelligence across various sectors, and the growing demand for computing power have driven up prices in industries such as nonferrous metals, electrical machinery, and computers,” NBS statistician Dong Lijuan said in a statement accompanying the figures. (…)
China’s footprint in global trade suggests higher charges ahead for global buyers.
Already, the oil shock and the AI boom have pushed China’s export prices out of a three-year streak of declines. Overall export prices rose 5% in April from a year ago, their biggest gain since April 2023. (…)
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China’s reflation trend continues to solidify
Inflation has been at or over 1% for the past 4 months, and in positive territory for 8 straight months, suggesting the reflation trend is solidifying.
Falling food and rental prices are balancing out higher inflation elsewhere
Rising raw material costs are likely to feed through to other prices moving forward
The measure of input prices for Japanese firms rose 0.9% from a month earlier, and April’s increase was revised higher, the Bank of Japan reported Wednesday. On an annual basis, prices climbed the most in three years — above most estimates in a Bloomberg survey of economists and also following an upward revision to the prior month.
“Higher import prices upstream are already feeding through to domestic producer prices,” said Masayuki Sato, an economist at NLI Research Institute. “I think the pace of increase in producer prices is likely to accelerate going forward.”
Sato said Wednesday’s data strengthen the case for the BOJ to move ahead with rate hikes sooner rather than later, while emphasizing the need to assess the impact of each adjustment.
The report underscores continued pressure on corporate margins arising from higher costs for raw materials and energy as the Middle East conflict shows no signs of abating. (…)
The rising producer price index reflects a growing willingness from suppliers to pass on rising operating costs to their corporate customers, an indication that inflationary expectations are taking root.
The gain in goods prices was led by higher commodity costs, including petroleum and coal products, electric power and gas as well as chemicals. (…)
Data earlier Wednesday showed that Japan’s small firms increasingly expect the impact of the Iran war to affect future wage talks, underscoring how companies may have trouble sustaining pay gains as the war drives up input costs and squeezes profit margins.
Xinjiang Chief Touts Trade, Diplomacy as Hormuz Disruption Bites
China is pitching its far-western Xinjiang region as a commercial gateway to Central Asia and Europe, courting neighbors at a moment when overland trade routes are drawing renewed attention due to shipping disruptions in the Strait of Hormuz. (..)
“Xinjiang has entered the best period of development in its history,” Chen said, adding that the region “is opening ever wider to the outside world.”
Chen spoke at the start of a conference on regional cooperation in Altay, a city near the borders of Russia, Kazakhstan and Mongolia. Mongolian Deputy Prime Minister Nyamtaishir Nomtoibayar was among the attendees.
While overland routes carry only a fraction of China’s trade, which moves overwhelmingly by sea, the near-closure of the Strait of Hormuz during the US-Israeli war against Iran has sharpened Beijing’s interest in corridors beyond unstable waters. (…)
Chen called for the development of “efficient and convenient major transport corridors,” citing the planned China-Kyrgyzstan-Uzbekistan railway, the China-Mongolia-Russia Economic Corridor, and expanded China-Europe freight services. (…)