WASHINGTON — Discounters and department stores cut payrolls sharply for the second consecutive month in March, which ran counter to the national trend that saw the economy add 120,000 jobs, the Labor Department said Friday.
Department stores slashed a seasonally adjusted 21,000 jobs to employ 1.53 million in March compared with February, while general merchandise stores, a category that includes department stores and discounters, cut 32,300 last month to employ three million. Apparel and accessories stores had a modest decline, trimming 100 jobs from payrolls to employ 1.36 million.
While the overall economy has posted several consecutive months of employment growth, the 120,000 gain last month was seen as disappointing by many economists and fell below their expectations. The unemployment rate fell slightly, shedding 0.1 percent in March to 8.2 percent.
“It seems like retailers are definitely pulling back here,” said Andrew Fitzpatrick, director of investments at Hinsdale Associates. “They ramped up a little earlier in the year and there is now a little more caution as we get further into the uptick.”
Fitzpatrick said gas prices and their impact on consumer spending are a concern for retailers.
“The fact is, the jobs data has gotten better, but disposable income is not that great,” he said. “I think the consumer is still dipping into savings for a lot of pops in spending so it creates some uneven data.”
Scott Hoyt, senior director of consumer economics at Moody’s Analytics, said, “Certainly the retail sales figures have been solid so it seems like a sales environment where you would expect a lot of hiring, not layoffs. The jobs data right now is confused by the seasonal holiday hiring and the impacts of an abnormal winter that we had this year.”
Hoyt noted that the warmer winter led to more positive consumer spending and an increase in retail hiring that is now being trimmed back in the post holiday season.
On a year-over-year basis, apparel and accessories store employment was higher by 20,000 in March than in March 2011, while general merchandise employment in March was 10,100 above the previous year and department store employment was 2,200 below a year earlier, Hoyt said.
“Job gains were almost 100,000 below expectations, the workweek shrank and the decline in the unemployment rate reflected not more employment, but fewer people looking for work,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “The big disappointments were in private services, where retail had a second successive bad month, and temp jobs fell for the first time since last June.”
Gault said there is “no reason to panic” based on one disappointing jobs report, but he noted “it will dampen some of the optimism about the strength of the recovery this year.”
“For the markets, the downbeat report will revive talk of more easing from the Fed. But we’ll need plenty more evidence before the Fed will make any decisions on that,” Gault said.
Most U.S., European and Asian markets were closed Friday, delaying reaction to the U.S. job numbers until Monday.
In the manufacturing sector, apparel manufacturers added 300 jobs to employ 150,000, while mills making apparel fabric and yarns cut 100 jobs to employ 120,300. Mills making home furnishings products also cut payrolls by 100 to employ 113,600.