WASHINGTON — As store closures rumble on throughout the retail sector, department stores and specialty stores trimmed payrolls in August, while general merchandisers added jobs as the overall economy registered increases, the U.S. Labor Department reported Friday.

Department stores shed 2,800 jobs to employ 1.2 million, while apparel and accessories stores cut 1,800 jobs to employ 1.37 million in August. General merchandise stores, a category that includes department stores and discounters, boosted payrolls by 1,800 to employ 3.2 million last month.

In the broader economy, employers added 151,000 jobs and the unemployment rate remained unchanged at 4.9 percent.

There were job losses across the board in the manufacturing sector. Apparel employers cut 400 jobs to employ 130,400, while textile mills making apparel fabric and yarn trimmed 600 jobs to employ 112,200. Textile product mills cut 400 jobs to employ 114,600.

Scott Hoyt, senior director of consumer economics at Moody’s Analytics, said the top line employment number came in slightly below expectations but noted the economy is growing at a good pace.

“We’re still getting over inventory corrections and dealing with the high value of the dollar, but consumer spending real terms is growing strongly and that has been propelling the economy forward.”

Retailers, however, have been struggling with weak pricing power, he noted.

“There is not a lot of pricing power in retail right now and that is really weighing on retailers and limiting both their sales growth and willingness to hire,” Hoyt said.

Apparel and accessories stores have been confronted with weak sales growth, posting small year-over-year sales declines.

“They are losing share particularly to online, plus they don’t have much pricing power right now,” Hoyt said. “You take those two together with a weak economic environment for them and [that is the reason] they are trying to cut costs, which we see in the employment numbers.”

Department stores have been going through a long period of consolidation.

“We continue to hear about store closing announcements and not very many store opening announcements and it seems fairly evident there is space reduction going on there and impacts employment,” he said.

“Today’s payroll data is solid for this late stage in the labor market cycle, though the gains are not as exciting as the past two months,” said Jack Kleinhenz, chief economist at the National Retail Federation. “The payroll numbers do not clarify whether a liftoff of interest rates by the Federal Reserve is imminent. Nonetheless, more jobs mean more income and this is a preliminary positive indication for ongoing consumer spending.”

There were job losses across the board in the manufacturing sector. Apparel employers cut 400 workers to employ 130,400, while textile mills making apparel fabric and yarn trimmed 600 jobs to employ 112,200. Textile product mills cut 400 jobs to employ 114,600.

Nariman Behravesh, chief economist at IHS Markit, said the “lackluster growth” last month was likely due to a slowdown in the strong job market momentum of the last two years.

“This means that the ultra-strong jobs gains of June and July were anomalies (as was the very weak gain in May),” Behravesh said.

IHS Markit is forecasting in the near term, U.S. payrolls will increase at an average monthly rate of around 175,000, “which implies a steady unemployment rate,” he said. “All this points to an economy that is reaching a steady, if unexciting, cruise speed of between 2 percent and 2.5 percent.”

He said the “mediocre” jobs gains in August and a “few conclusive signs of any acceleration in inflation strongly suggest that the Fed will not increase the federal funds rate at the upcoming [meeting] Sept. 20 to 21.”
He predicted the timing of the next rate hike in December after the presidential election.

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