Strong Job Growth Seen in July

A robust increase in retail payrolls helped deliver stronger-than-expected employment growth in July, the Labor Department reported.

WASHINGTON — A robust increase in retail payrolls helped deliver stronger-than-expected employment growth in July, as the U.S. economy generated 207,000 jobs, the biggest rise since April.

Apparel and accessories stores added 12,500 workers in July to employ a total of 1.4 million. General merchandise stores generated 10,000 jobs, bulking up their payrolls to 2.9 million. Within that category, department stores added 10,300 jobs to employ a total of 1.6 million.

Some economists expressed caution, saying overall economic growth was still modest and that the strength of back-to-school and holiday sales were still in question.

“This is not an economy that’s going to be [consistently] generating 200,000 jobs a month,” said Ken Goldstein, an economist at the Conference Board. “Higher wages are almost a certainty, higher prices are not and that’s exactly what’s been weighing on business attitudes.”

Textile mills cut their rosters by 1,700 to employ a total of 222,300, but textile product mills registered an increase of 400 jobs for a total of 177,500. Apparel producers added 800 jobs for a headcount of 258,000, the first monthly increase since July 2002.

Charles McMillion, president and chief economist at MBG Information Services, said the pending passage of the Central American Free Trade Agreement and looming restrictions on Chinese imports might have caused a temporary lift in apparel employment.

The seasonally adjusted 207,000 jobs added in July — experts had estimated 180,000 — brought total U.S. non-farm payroll to 133.8 million, the Labor Department reported Friday. The rise followed a weaker-than-expected increase of 146,000 in June. The unemployment rate was unchanged at 5 percent, near a four-year low.

The July bump in retail employment shows that stores should be well-staffed, but there’s still a question as to whether the consumer will be spending at retail, especially with high prices on gasoline.

“No real change in the increase in average hourly wages certainly means that you don’t have a whole lot of folks out there who are just absolutely spending their extra change,” Goldstein said. “They don’t have a whole lot of extra to spend. That little bit of extra is all going down the gas tank.”

Other macroeconomic factors, such as debt levels, could also play into consumer spending.

This story first appeared in the August 8, 2005 issue of WWD.  Subscribe Today.

“Today’s jobs and earnings report provides very little relief for the economy’s precarious dependence on the housing boom and related borrowing,” McMillion wrote in a report. “I continue to expect consumer and business spending to slow, unevenly, over the remainder of the year, as economic vulnerabilities increase.”