WASHINGTON — Apparel specialty retailers and department stores trimmed payrolls in December despite a gain in employment in the overall economy at a time of fiscal uncertainty, a Labor Department report showed Friday.
Economists said the tense fiscal cliff negotiation in Washington had some impact on business confidence and as a result led to weaker hiring, particularly among smaller businesses in the month. Although Congress and the White House struck a New Year’s Eve deal on taxes that averted a financial crisis, the two sides will have to negotiate a new compromise by the end of March on automatic spending cuts to federal budgets and also confront the debt ceiling, which could further dampen business and consumer confidence, according to economists.
Apparel and accessories stores cut payrolls by 18,700 jobs on a seasonally adjusted basis in December to employ 1.42 million, after adding 33,000 jobs in November. Department stores trimmed 4,800 jobs from payrolls to employ 1.5 million last month. General merchandise stores, a category that includes department stores, added 300 jobs to employ 3.1 million.
“Apparel specialty stores had a large decline in December, but that was preceded by a big increase in the preceding month,” said Scott Hoyt, director of consumer economics at Moody’s Analytics. “It was the timing of hiring with a shift in Thanksgiving,” which fell earlier this year and led to a boost in hiring in November.
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Hoyt said employment at apparel and accessories stores is still healthy, growing about 9,000 on average a month over the past four months. Department stores, on the other hand, are “hurting, although not terribly,” Hoyt said. The monthly average over the past four months is a decline of 350 jobs in the department store sector.
General merchandise stores, including both department stores and discounters, have been adding 8,000 jobs a month over the same period. “That is relatively healthy, and it is better than we saw in the first half of the year,” Hoyt said.
In the manufacturing sector, apparel employment fell by 400 to 145,800. Mills making apparel fabrics and yarns added 400 jobs to employ 119,900 last month, while mills making home furnishings products added 800 jobs to employ 115,000.
“It is hard to see employment growth accelerating early in 2013, but we do think that the economy’s fundamentals are gradually improving and look to faster growth later in the year to produce an average monthly jobs gain of 170,000 for 2013,” said Nigel Gault, chief U.S. economist at IHS Global Insight.