WASHINGTON — Retailers appeared to shrug off concerns about the government shutdown and potential debt default in mid-October, as hiring continued at a steady pace in most segments last month, the U.S. Labor Department’s monthly employment report showed Friday.
Discounters and department stores added jobs to payrolls in October, driving an overall retail employment gain of 44,400. However, softness in hiring at apparel and accessories stores remained a concern as merchants in that sector shed jobs for the second consecutive month.
General merchandise stores, including discounters and department stores, added 7,800 jobs to payrolls to employ 3.2 million in October. Department stores added 900 jobs to employ 1.49 million.
Apparel and accessories stores trimmed 12,500 jobs to employ 1.42 million last month.
“This is the second straight month apparel specialty stores have had big declines,” said Scott Hoyt, director of consumer economics at Moody’s Analytics. “It is not totally inconsistent with the weak sales that we are seeing there. They posted sales declines in both August and September. I think the trend in sales growth is definitely unfavorable there.”
Hoyt said the strength in employment growth for discounters is “consistent with the cautious consumer story.” He pointed to the fact that personal spending only rose 0.2 percent in September while personal income grew 0.5 percent, according to new government data also released on Friday.
“While retailers and businesses are hiring, consumers remain cautious, but we remain steadfast in our belief that consumer confidence and spending will improve,” said Jack Kleinhenz, chief economist at the National Retail Federation.
Kleinhenz noted the employment report “puts the U.S. economy in a very positive light heading into the fall and winter seasons.”
“The government shutdown had little to no impact on the improving employment situation, which is steadily improving along with GDP,” he said. The NRF is predicting that retailers will hire an additional 720,000 to 780,000 employees this holiday season and see a 3.9 percent increase in sales.
The overall economy added 204,000 jobs in October, beating economists’ expectations by a fairly wide margin. The unemployment rate edged up slightly to 7.3 percent from 7.2 percent in September.
“Dissecting the 204,000 increase in employment, the sectors that showed the greatest improvement in job growth remain consistent with prior months — 87 percent of these new jobs came in the private service-providing sectors,” said Doug Handler chief U.S. economist at IHS Global insight. “There was a modest amount of job growth in the construction and manufacturing sectors, but this growth merely emulated what one would expect in a moderately growing economy rather than any significant cyclical upturn.”
In the apparel and textile manufacturing sector, apparel employment fell 100 to 140,300 in October. Mills making apparel fabrics and yarns trimmed 1,000 jobs to employ 114,900, while mills making home furnishings products cut 500 jobs to employ 113,600.