By  on June 4, 2007

WASHINGTON — U.S. textile and apparel producers and department stores cut payrolls in May, bucking the broader trend that added 157,000 jobs across the economy. Unemployment stayed at 4.5 percent.

Compared with April, domestic apparel producers shed a seasonally adjusted 2,100 jobs to employ 219,600, as textile mills trimmed payrolls by 1,500 to 173,300 and textile product mills reduced head counts by 1,100 to 155,500, the Labor Department said Friday.

Squeezed by the rise of powerhouse manufacturers in China and elsewhere, domestic producers, particularly apparel factories, have been losing jobs for years.

Department stores were squeezed last month, shedding 4,100 jobs for a total of 1.6 million. The decline came after an 11,000 dip in employment in April for the sector, which is in the midst of a challenging competitive environment and the conversion of 400 former May Co. doors to the Macy's nameplate.

Apparel and accessories stores joined in the broader employment trend, adding 900 positions in May for a total of 1.5 million.

Economists watch job figures closely, since two-thirds of the economy is supported by consumer spending and people are likely to cut back on purchases if they feel their jobs might be in jeopardy.

"The consumer, we'd say, has been quite bulletproof," said Michael Englund, principal director and chief economist at Action Economics, pointing out that spending has continued through the slowdown in the housing sector.

A strong stock market and income growth has boosted consumer confidence, he said. The S&P 500 index hit an all-time high last week.

Gas prices are also near all-time highs, with a gallon of regular selling for an average of $3.18 on Friday, according to the American Automobile Association.

Although many consumers continue to spend, there might be a problem down the line.

"Through the first four months of this year, households are spending down their savings at twice the rate of the same period last year, with 2007 set to be the unprecedented third consecutive year of dis-savings," Charles McMillion, president and chief economist at MBG Information Services, wrote in an analysis.

McMillion also warned that the recent evolution of the workforce is a danger to growth."Job growth in May, while much better than in recent months, remains concentrated in those industries that are not generally exposed to outsourcing or import competition and do not export," he said. "The worsening deficit in global trade continues to undermine U.S. production and growth."

The U.S. trade deficit reached a record $763.6 billion last year, with almost one-third of it because of trade with China.

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