WASHINGTON — Department store jobs fell sharply in October and unemployment reached its highest level in 14 years, while President-elect Barack Obama urged passage of an economic stimulus package in a press conference on Friday.
This story first appeared in the November 10, 2008 issue of WWD. Subscribe Today.
Amid falling retail sales, department stores slashed 18,000 jobs to employ 1.476 million, and apparel and accessories stores cut 700 positions to employ 1.493 million, the Labor Department said Friday.
Apparel manufacturers cut 4,000 jobs in October to employ 189,400. Textile mills that primarily manufacture apparel fabric trimmed 1,300 jobs to employ 147,900, and textile product mills, which produce industrial and home furnishing textiles, eliminated 500 jobs to employ 147,800.
Reductions in the manufacturing, construction and service sectors propelled the overall loss of 240,000 jobs last month, compared with consensus estimates that predicted a loss of 200,000 jobs. It was the 10th consecutive monthly decline. The unemployment rate climbed to 6.5 percent from 6.1 percent in September, the highest level since 1994.
The economy has shed 1.2 million jobs this year, with more than half of those lost in the last three months. Last month’s declines followed a loss of 284,000 jobs in September, revised from an initial estimate of 159,000. The employment decrease in September was the worst since October 2001, directly after the 9/11 terrorist attacks.
Downward revisions in September and August, combined with the October losses, means more than 400,000 jobs were lost that weren’t expected, said Charles McMillion, president and chief economist at MBG Information Services.
“It doesn’t bode well at all,” McMillion said. “In an environment that is already awful across the board, these figures mean retailers are going to need to be even more aggressive heading into the holiday season.”
Job losses in November “are very likely to be worse,” McMillion said. “Recovery programs are urgently needed that are of the scope and scale of New Deal initiatives.”
Retail sales, manufacturing levels and the service sector have all taken hits in recent months, he said. Those contractions in the real economy combined with the credit crisis have created a “two-wheeled recession.”
The economic situation “continues to decline and the bottom doesn’t appear to be near,” said Richard Yamarone, chief economist at Argus Research.
The economy is clearly a top priority of the president-elect. Before his first news conference since the election, Obama met in Chicago on Friday with economic advisers. In urging Congress and the Bush administration to enact a stimulus plan, he warned of “difficult choices.”
On Wall Street Friday, retail shares managed to rise 2.1 percent, or 5.74 points, to 273.58. But they were down 9 percent for the week. Investors remained fickle last week, with shares perking up for Election Day only to slump afterward on renewed economic concerns. During Thursday’s trading session, Warnaco Group Inc. plummeted 30.6 percent after the firm lowered profit expectations, and AnnTaylor Stores Corp. fell 25.7 percent after the chain laid off 19 percent of its headquarters staff and revved up its restructuring.
Retailers also reported the worst October sales results in years, with luxury players suffering the largest declines. On Friday, Warnaco rose 1.9 percent to $18.14, leaving it down 39.1 percent for the week, and Ann Taylor was up 2.9 percent to $9.19, down 26.5 percent for the week.
Other retail stocks losing ground from the previous Friday included J. Crew Group, down 21.2 percent to $16.01; Saks Inc., 17.7 percent to $4.94; Coach Inc., 16.6 percent to $17.18; Nordstrom Inc., 14.1 percent to $15.50, and Abercrombie & Fitch Co., 13.3 percent to $25.10.