WASHINGTON — Retailers, banking on steady consumer spending and higher consumer confidence, added 28,000 jobs to payrolls in May as employment growth in the overall economy beat economists’ expectations.
Apparel and accessories stores added a seasonally adjusted 5,800 jobs to employ 1.4 million last month, according to the monthly employment report released by the Labor Department on Friday. General merchandise stores, including discounters and department stores, added 9,700 jobs to employ 3.1 million. Within the general merchandise group, 3,200 jobs came from department stores, which employed 1.49 million in May.
“We know spending is holding up relatively well — 2 percent growth — so that is obviously providing some impetus to the hiring that is going on,” said Scott Hoyt, director of consumer economics at Moody’s Analytics. “We are still a little worried about the near-term prospects because of the sequester [federal spending cuts], but we have not seen too many signs of slowing yet.”
He said apparel and accessories store employment, which posted a combined decline of 23,800 jobs from February through April, has been weak, despite the gain in May.
“May’s number almost looks like a payback for a particularly weak [three-month period], more than any real sign of strength,” Hoyt said. “It appears those retailers do not see the need to hire right now, and some of that may be related to sales, while some may be related to the amount of hiring they did in the lead-up to last year’s holiday season.”
Hoyt said general merchandise retail employment growth has been trending well, with gains in the neighborhood of 10,000 jobs for four months in a row. Department store employment has also had a positive trend, although Hoyt said May’s gain was the weakest this year since January.
“The labor market continues to show slow progress in this recovery,” said Jack Kleinhenz, chief economist at the National Retail Federation. “While this report was slightly better than expected, we are still concerned about growth and from where it will come. Fiscal headwinds remain in place. Job creation across retail sectors was wider in May than the previous two months, and we expect that we will gain some momentum in the second half of 2014.”
Overall retail employment rose by 175,000, beating expectations. While the unemployment rate edged up to 7.6 percent in May from 7.5 percent in April, Hoyt said it was for the right reason — that more people were confident about finding jobs and entered the market looking for employment.
The one negative in the report was a decline of 8,000 jobs in the manufacturing sector, which marked the third consecutive month of declines.
“While manufacturing is struggling, the small jobs declines are not putting a big dent in the overall positive jobs picture,” said Nariman Behravesh, chief economist at IHS Global Insight.
In the apparel and textile manufacturing sector, apparel employment rose 100 to 143,300. Mills making apparel fabrics and yarns trimmed 500 jobs to employ 113,800, while mills making home furnishings products cut 300 jobs to employ 114,200.