WASHINGTON — The latest job figures could confirm widespread fears of a recession as both retailers and manufacturers posted steep employment losses.
This story first appeared in the March 10, 2008 issue of WWD. Subscribe Today.
Retailers cut payrolls by a seasonally adjusted 14,100 workers in February as the overall economy lost 63,000 jobs, the worst loss in five years, the Department of Labor reported Friday. However, the unemployment rate dropped to 4.8 percent last month from 4.9 percent in January.
Textile producers cut 2,000 jobs, with l,000 lost jobs at both textile mills and textile product mills, respectively. Apparel producers added 200 workers last month.
Figures were not good for retailers, economists said. The Department of Labor statistics showed a loss of 3,000 specialty store jobs to 1.5 million and 11,100 department store jobs to 1.6 million.
“The debate should no longer be about whether there is or is not a recession, only about how deep it will be. Private employment has now fallen for three months in a row,” said Nigel Gault, chief economist of Global Insight, in his analysis of the February statistics.
The drop in private employment was widespread across a number of sectors, including a sharp decline in retail trade jobs, which is also a bad indicator, he said.
The decline in the unemployment rate, Gault said, looks odd on the surface, but the steep losses in the labor force numbers were worse than employment.
Retail job losses in February aren’t surprising, said Richard Yamarone, chief economist at Argus Research Corp. A certain number of layoffs are expected after the holiday season, which many say includes January, but nonetheless the job declines last month were steep.
“What we saw [in the Department of Labor statistics] is that workers simply weren’t needed in February. They were either not replaced when they quit or they were dismissed,” Yamarone said.
Economists said the job losses are expected to continue in the months ahead as recession fears appear more likely to come to pass.
“The report confirms that the economy has slowed very sharply,” Gault said.
Yamarone said the declining job numbers could be expected to continue for at least the next six to nine months, with some sectors feeling the pinch more than others.
“Women’s apparel in particular is going to come under stress in the next couple of months,” predicted Yamarone.
Uncertainty will be driven by higher apparel prices from China, broader economic issues and a tendency among the primary household shoppers, women, to buy necessary goods instead of discretionary items like apparel, he said. The combination of factors will continue to drag down the sectors where women shop, as has already been seen in recent same-store sales figures for some companies, Yamarone said.
Not all economists think a recession is imminent or already in effect, however. Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said the current state of affairs shows a bifurcated economy. Sectors related to housing and some home manufacturers are suffering, but a number of sectors, including education, health care and hospitality, added jobs in February. Job losses would be across the board if a recession had truly started, he said.
“It’s splitting hairs, but technically we may end up avoiding a recession. This period of iffy or no growth will last for a long time; it will be another year and a half before we see growth,” he said.
It is noteworthy, however, that the corporate sector is now showing job losses that weren’t there a few months ago, Dhawan said.