By and  on August 7, 2006

WASHINGTON — Apparel and textile firms shed a seasonally adjusted 3,200 jobs in July compared with June, while department stores also reduced payrolls. But specialty stores added workers, the Labor Department reported.

Overall unemployment rose last month, news that came a day after the Senate voted down a bill that would have raised the minimum wage for the first time in nine years.

In the fashion and apparel sectors, textile mills cut a seasonally adjusted 2,400 positions in July, lowering employment to 194,900, as apparel factories reduced head counts by 1,000 to 249,500. Textile product mills managed to add 200 positions, for a total of 168,800. The domestic industry has been shrinking for years, as more apparel sold to U.S. customers is made abroad.

Department stores reduced head counts by 3,100 to 1.6 million compared with June, while apparel and accessories stores added 8,900 positions to employ 1.4 million in July. Consolidation in the department store realm, particularly the combination of Federated and May Department Stores, appears to be fueling at least a part of the workforce reduction.

The broader economy added 113,000 jobs, fewer than the 144,000 predicted by economists, as the unemployment rate rose to 4.8 percent from 4.6 percent, marking the first increase since February.

"Businesses are suffering from the twin hurdles of higher interest rates and record energy prices, and that is something that's causing them to pull back on the hiring reins," said Argus Research Corp.'s chief economist Richard Yamarone.

The Federal Open Market Committee, which has increased the benchmark federal funds interest rate 17 consecutive times to keep the economy from growing too quickly, meets again on Tuesday.

"I'm not sure we're totally out of the woods in terms of further Fed tightening, but it may be now a good while before we see another [rate hike]," said Michael Niemira, chief economist and director of research at the International Council of Shopping Centers. "What we're seeing is a moderation ... in economic growth. It's not totally in place. It's more of a transition, but there are also some worries that we haven't seen play through, on the housing side in particular."

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