Retailers were on the retreat when it came to hiring last month.
Official figures revealed Friday that retail employment slid by more than 6,000 last month. Within that, apparel and accessories’ payroll was flat at 1.4 million, while department stores shed 9,000 jobs to employ 1.1 million.
The wider U.S. economy added just 20,000 jobs in February, far below Wall Street expectations for a 180,000 increase and the weakest growth since September 2017 when the labor market was disrupted by two major hurricanes, according to the U.S. Bureau of Labor Statistics.
As well as retail, the headline number was dragged down by losses in construction and mining jobs, with the former shrinking its payroll by more than 30,000 in February.
At the same time, the U.S. unemployment rate slipped from 4 percent to 3.8 percent after the impact of the partial government shutdown fell out of the picture. The high number of furloughed workers had previously pushed up the rate.
Some economists suggested that February’s weak numbers could just be a result of a strong January and also impacted by a number of seasonal factors.
Brian Coulton, chief economist at Fitch Ratings, said: “This is a big miss in payroll gains relative to consensus expectations but we’ve had a couple of really strong months prior to this which have just been revised up. Weather may have affected construction jobs as well in February. Looking through the noise by taking the last three months’ average gain at 180,000 still gives us a good number.”
He added, though, that coming in the context of steeply rising global growth concerns, this certainly won’t help confidence.
Others pointed to stronger wage growth numbers at a time of low unemployment, which could mean that companies are simply struggling to find workers amid a tight labor market.
Gad Levanon, chief North America economist at The Conference Board, said: “As the labor market continues to tighten, wages and labor costs will continue to accelerate, creating inflation pressure.”
But the picture in retail isn’t clear cut because while there has been much evidence that some retailers are having difficulties attracting workers, other have been or will be cutting jobs as they rethink their physical footprint in the Amazon era.
Most recently, Chico’s FAS Inc., which continues to struggle, updated investors on its plans to close 100 Chico’s, 90 White House|Black Market and 60 Soma stores over the next three years, while Dollar Tree Inc., the discount retailer, disclosed that it would shutter up to 390 underperforming Family Dollar doors this year and Gap Inc. will shutter 230 Gap stores.
As for what the jobs picture means for interest rates, Michael Pearce, senior U.S. economist at economic consultancy Capital Economics, thinks the Federal Reserve will likely sit on its hands for the rest of the year.
In January, the central bank diverted from its path of nudging up interest rates, holding them steady after a two-day policy meeting and stating that it would be “patient” when it comes to further increases.
“The slump in payroll employment growth in February reinforces the message from the incoming activity data that economic growth is slowing below its 2 percent potential pace in the first quarter,” Pearce said. “That makes us more confident in our view that the Fed will remain on hold this year and that its next move will be to cut rates.”