WASHINGTON — The apparel retail sector seems to be lagging behind signs of recovery in the job market.
This story first appeared in the August 10, 2009 issue of WWD. Subscribe Today.
Amid moderating national job losses and a lowering of the unemployment rate, fashion stores eliminated 15,000 jobs in July, with specialty stores cutting 7,400 positions to employ 1.42 million last month, while department stores cut 7,600 jobs to employ 1.52 million.
“If there’s a recovery underway, someone forgot to tell the retailers, because clearly the numbers were not good,” said Richard Yamarone, director of economic research at Argus Research Corp. “This is a consumer-driven recession, and it’s going to take the consumer to get us out of it. It doesn’t look like they’re willing to cooperate.”
Retailers, particularly specialty and department stores, have struggled in recent months with weak same-store sales and flagging consumer confidence levels. Shoppers have favored discount retailers during the recession and have tended toward necessity purchases.
In the manufacturing sector, textile mills, which produce apparel fabric, cut 2,000 jobs to employ 121,900. Textile product mills, which make home furnishing fabric, eliminated 800 jobs to 125,700. Apparel manufacturers added 1,000 jobs to employ 166,800.
The overall pace of job losses moderated in July, as the economy shed 247,000 jobs and the unemployment rate fell slightly to 9.4 percent from 9.5 percent, the Labor Department said on Friday.
The employment figures were better than consensus predictions and the jobs losses were the smallest decline in a year, but analysts cautioned the high unemployment rate has to temper any positive interpretations.
“Some prospective workers have just given up looking,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “We will need to see sustained employment gains before concluding that unemployment has peaked.”
Gault said the unemployment figure is unlikely to peak until the first half of 2010 and will probably go above 10 percent, “but [Friday’s] report brought the light at the end of the tunnel a bit closer.”
But Scott Hoyt, senior director of consumer economics for Moody’s Economy.com, said, “The economy is starting to stabilize. We, and most economists, think that the recession is nearing its end. Unfortunately, that doesn’t mean job losses are going to end immediately. We are seeing signs of less deterioration and more stabilization.”
Investors reacted to the lower unemployment rate, generally looking past the lethargy at retail, and set stocks sharply higher Friday. The S&P Retail Index shot up 3.6 percent, or 12.98 points, to 372.70, its strongest one-day gain since June 1 and highest close since Sept. 26. The Dow Jones Industrial Average was also on the rise, picking up 1.2 percent, or 113.81 points, to end at 9,370.07.
Among the retail winners Friday were Pacific Sunwear Of California Inc., up 13 percent to $3.83; Cache Inc., 10.7 percent to $4.95; J. Crew Group, 9.9 percent to $32.11; Saks Inc., 9.8 percent to $5.84; J.C. Penney Co. Inc., 9.7 percent to $34.43; Chico’s FAS Inc., 8.7 percent to $12.68; The Men’s Wearhouse Inc., 8.4 percent to $23.76; Nordstrom Inc., 8.2 percent to $30.30; Charming Shoppes Inc., 8.1 percent to $5.18, and Macy’s Inc., 6.5 percent to $15.99. (For more on stocks, see page 14.)