WASHINGTON — Clothing and accessories stores continued to add jobs in August despite plummeting consumer confidence, as department stores and general merchandise stores cut their payrolls, the U.S. Labor Department said Friday.
Specialty stores added 4,900 jobs to employ 1.43 million in August, showing the strongest sign of long-term growth in the three apparel retail sectors. Department stores, continuing a long-term slump associated with years of consolidation and downsizing, slashed 2,400 jobs to employ 1.49 million, while general merchandise stores, which includes discounters and department stores, reduced payrolls by 2,100 jobs to 2.98 million.
“Apparel [specialty] stores are still doing comparatively well on a sales growth basis,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics. “As long as sales are expanding, there is no compelling reason not to be adding jobs.”
As for department stores, Hoyt said the one-month decline in August did not “fully reverse” the gain of 5,400 jobs in July. The same held true for general merchandise stores, which added 3,900 jobs in July.
“The good news right now is there is a disconnect between consumer confidence [which hit a two-year low in August, according to the Conference Board] and consumer spending,” Hoyt said. “Consumers have continued spending. July was rather good and August is shaping up to be weaker, but it is not terrible.
Consumers are hanging tough from a spending perspective, even though they are worried.”
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said the low consumer confidence level does not bode well for retailers.
“That is bad news for retailers,” said Dhawan. “Part of the drop is the uncertainty going on with the debt on the political side and part of it is people are worried about home values, which haven’t come up. We are still seeing them spend…but it’s pretty fragile right now.”
The economy created no new jobs in August, falling well below economists’ expectations of a gain of 75,000 new jobs, as the overall employment rate remained unchanged at 9.1 percent.
Despite the relative strength in consumer spending, businesses on a broader scale are still nervous and holding back on hiring, Hoyt said.
“Businesses are pretty clearly not hiring right now,” Hoyt said. “The good news is that most evidence suggests they are not laying of a whole lot of workers either.”
On the manufacturing side, apparel manufacturers added 1,100 jobs to payrolls last month to employ 154,400. Despite the uptick in apparel manufacturing jobs, employment in the sector was down from year ago, when jobs stood at 155,800.
Payrolls at mills making apparel fabrics fell 900 to 122,100, while employment at textile product mills, which make mostly home furnishings and industrial fabrics, fell 400 last month to 115,600.