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Discounters, Specialty Stores Boost Jobs in July

Discounters and specialty stores added jobs in July in contrast with overall retail trends as the U.S. unemployment rate reached a four-year high.

Discounters, like Wal-Mart seen here, added jobs in July.

WASHINGTON — Discounters and specialty stores added jobs in July in contrast with overall retail trends as the U.S. unemployment rate reached a four-year high, the Labor Department said.

This story first appeared in the August 4, 2008 issue of WWD.  Subscribe Today.

The stores apparently benefited from the residual effects of government tax rebate checks, analysts said. However, textile and apparel manufacturers cut payrolls.

General merchandise stores, which include discounters like Wal-Mart Stores Inc., added 3,900 jobs last month to employ 2.9 million people. Department stores, which are also included among general merchandise merchants, trimmed 2,200 positions to 1.5 million. Clothing and accessories stores added 700 jobs, bringing the number of employees for the sector to 1.5 million.

The total retail sector trimmed 16,500 jobs to employ 15.3 million people, with the job losses propelled by auto and home improvement sectors.

The manufacturing sector continued its decades-long contraction. Domestic apparel manufacturers trimmed 1,100 jobs. Textile manufacturers shed 3,800 jobs to employ 149,400 people, including a loss of 2,600 positions at textile mills that produce apparel fabric. Textile product mills, which manufacture mostly home furnishing fabrics, cut 1,200 jobs to employ 148,000 people.

In the overall economy, the downward trend continued, as employers cut 51,000 jobs, the seventh consecutive month of national employment declines. The jobless rate rose to 5.7 percent from 5.5 percent in June. The Labor Department said Friday that it adjusted June job losses to 51,000 from 62,000.

“Retail stands out as one of the sectors being hit hardest by this latest contraction of payrolls,” said John Lonski, chief economist, Moody’s Investor Services, adding that overall retail employment was down for the eighth consecutive month.

“Consumers have diminished job prospects, dwindling paychecks and higher travel costs to shopping centers, which doesn’t bode well for the retail sector,” said Richard Yamarone, director of economic research, Argus Research Corp.
Stores are paring inventory and offering steep discounts to try to counteract the slowing economy, and at the same time trying to trim their employment costs, he said.

“This has resulted in notable declines in service, particularly in department stores,” Yamarone said. “Long lines, unkempt displays and essentially no help on the sales floors are commonplace at many large department stores. Now that there aren’t too many tax rebate checks left, we suspect that retail-related layoffs will trend higher in coming months.”