WASHINGTON — Department and specialty stores and domestic apparel and textile producers cut jobs last month, as the overall U.S. economy added a less-than-anticipated 138,000 seasonally adjusted positions.
The Labor Department’s monthly report on employment Friday said general merchandise stores reduced their payrolls by 34,200 to 2.9 million. Within that category, department stores made up almost half of the decline, with a drop of 15,200 jobs for total employment of 1.6 million. Apparel and accessories stores trimmed payrolls by 1,000 to 1.4 million.
Part of the decline in department store employment may be the result of mergers, especially Federated Department Stores’ acquisition of the May Department Store Co.
“It may very well be that, due to consolidation and new technology, the retail trade is becoming even more efficient,” said Fariborz Ghadar, director of the Center for Global Business Studies at Pennsylvania State University.
Overall productivity, which measures the amount produced for each hour worked, rose 3.2 percent on an annual rate during the first quarter, according to another Labor Department report last week.
Increased productivity, as well as fierce competition from imports, continues to pressure employment at U.S. apparel and textile producers.
Textile mill payrolls fell by 2,200 to 201,600, while textile product mills cut 1,000 jobs to 171,600 and jobs at apparel factories were down 1,300 to 251,000.
Across the economy, the unemployment rate held steady at 4.7 percent in April and average hourly wages for non-supervisory workers increased 3.8 percent to $16.61 from a year earlier.
The job growth followed the addition of 200,000 new positions in March, but lagged the boost of 200,000 expected by many economists. Still, the overall employment picture is seen as steady.
A strong job market generally makes consumers more willing to spend and they have been out buying, as was seen in the strong comparable-store sales figures reported by most stores last week.
“I’m sure at some point the consumer is going to get tapped out, is going to complain about $3 gasoline and a higher interest rate on her mortgage, but the fact of the matter is, as of today, that has not happened,” Ghadar said.
This story first appeared in the May 8, 2006 issue of WWD. Subscribe Today.
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said all current signs point to a “Goldilocks economy,” or one that’s not too hot and not too cold.
“If the economy is too hot, it will sooner or later lead to inflation, which means that the Federal Reserve bank will then step in and put the brakes on,” Dhawan said. “If it’s too cold, that means the job growth is not going to be there and people have very little to look forward to.”