By  on July 9, 2007

WASHINGTON — Retailers and textile and apparel manufacturers all trimmed payrolls last month, bucking the overall positive U.S. employment trend.

The workforce at department stores fell by 7,300 to 1.6 million, and apparel and accessories stores reduced head counts by 5,000 to 1.4 million, the U.S. Labor Department reported Friday.

"I knew there were some dismissals under way, but I didn't know there were this many," said Richard Yamarone, chief economist at Argus Research Corp.

The cuts could partly be the result of an increase in some state minimum wages or in anticipation of a boost this month in the federal minimum wage to $5.85 from $5.15, Yamarone said. Under legislation passed by Congress, the federal minimum wage will rise to $7.25 by July 2009. Many retailers, however, already pay more than the minimum wage.

"I'm wondering if we're seeing some of the results of merger activity," said Paul Nolte, director of investments at Hinsdale Associates.

The drop-off also may reflect a retrenchment in retail as companies such as Wal-Mart Stores Inc. scale back expansion, Nolte said.

In addition, employment is closely tied to sales, which have been uneven, with luxury players outperforming the mid-range operators. Overall store sales were strong in May, with volume at all retail and food service outlets up 1.4 percent, the largest bump in 16 months, according to a U.S. Commerce Department report.

Pressured by intense overseas competition, textile mills continued to lose out, shedding 2,300 jobs in June to employ 171,100. Textile product mills cut 700 positions for a total workforce of 154,800, and employment at apparel producers slid by 2,100 to 217,600.

The national job picture was rosier in June, with employers adding 132,000 seasonally adjusted jobs compared with May. The growth came after a gain of 190,000 jobs in May and 122,000 in April. Average weekly earnings grew by 0.6 percent in June to $589.18, and the unemployment rate held steady at 4.5 percent.

Economists were generally pleased with the employment growth.

"Job creation has slowed this year to 145,000 [per] month on average in the first six months from 189,000 on average in 2006, but not enough to threaten the [economic] expansion," Nigel Gault, Global Insight's chief U.S. economist, wrote in an analysis. "Gains in employment and real wages should ensure that consumer spending revives in the second half of the year after a weak second quarter when it was hit by high gasoline prices."

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