WASHINGTON — Department stores and general merchandisers added jobs to payrolls in June, while specialty stores trimmed back as the overall economy registered gains and unemployment rate ticked up, the U.S. Labor Department reported Friday.
Department stores added a seasonally adjusted 4,300 jobs to employ 1.3 million in June, while general merchandise stores, a category that includes department stores and discount stores, added 8,700 jobs to payrolls to employ 3.19 million. Apparel and accessories stores cut 2,200 to employ 1.37 million last month.
In the broader economy, employers added 287,000 jobs, but the unemployment rate rose to 4.9 percent from 4.7 percent in May, a reflection of more people entering the labor force looking for work.
Scott Hoyt, senior director of economics at Moody’s Analytics, said the overall job growth was in line with expectations and was broad-based, with retail making a “significant” contribution.
“The economy is growing at a healthy pace and I think the employment data bears that out,” Hoyt said.
Hoyt said Moody’s expects wage growth to continue to increase, based on upticks in hourly average earnings in the past few months. Average hourly earnings rose 0.1 percent in June and are up 2.6 percent against a year earlier.
But he said retail as a whole, despite a strong employment gain of 29,900 in June, is still facing challenges.
“Retailers are in a tough environment right now, with the dollar so strong and pricing power weak, it is very competitive,” Hoyt said. “Consumers are shifting more to online and experiential types of purchases and that is also making it tough [on employment].”
General merchandise stores have had the strongest employment growth compared with department stores and specialty stores, he said.
On a year-over-year basis, employment is up 57,400, Hoyt said. But he warned that weak sales growth could affect hiring in the sector going forward.
By comparison, department stores are down 16,600 compared with a year ago and specialty stores are up 12,000, which Hoyt said was the weakest year-over-year growth for specialty stores this year.
“This all comes out of a lack of sales growth,” he said. “It is not a good environment for hiring when they are not generating sales growth and there is no pricing power out there.”
A group of economists at IHS Global Insight said in an analysis of the report that it was a “blockbuster month” for U.S. employment, but they stressed that the three-month average is “more muted.”
“Payroll employment came roaring back in June after two nail-biting months of slowing gains,” the IHS economists said. “ Payroll employment posted blockbuster gains of 287,000 (252,000, excluding returning Verizon strikers), above the consensus projection of 180,000. Meanwhile, the unemployment rate climbed to 4.9 percent from 4.7 percent due to strong labor force gains.”
The economists cautioned about the robust monthly jobs growth, noting that payroll employment increased 448,000 in the second quarter, marking the weakest gain in 15 quarters.
“On balance, the quarterly estimates suggest that job growth slowed in the second quarter, despite June’s strong payroll gains,” they added.
In addition, they expect the June jobs report to “temper pessimism” stemming from the May report at the Federal Reserve and are predicting the next rate hike of 25 basis points to come at the banks’ December 13-14 meeting.
In the manufacturing sector, apparel employers cut 400 jobs to employ 132,600, while textile mills making apparel fabric and yarn trimmed 300 jobs to employ 113,100. Textile product mills cut 700 jobs to employ 116,700.