WASHINGTON — Investors poured money into U.S. retail stocks Friday, pushing the sector to a new high after a much better-than-expected reading on January employment bolstered the case for a strengthening recovery.
This story first appeared in the February 6, 2012 issue of WWD. Subscribe Today.
The U.S. added 243,000 jobs in January compared with December — the largest one-month increase since April — and the unemployment rate fell to 8.3 percent from 8.5 percent, according to the Labor Department. Economists expected job gains of just 155,000 and a steady unemployment rate.
Department stores, general merchandise stores, textile mills and apparel manufacturers all followed the national trend and boosted payrolls in January, while apparel and accessories stores trimmed back in the post-holiday season.
The S&P Retail Index jumped 1.7 percent, or 9.61 points, to 563.34 — having traded as high as 563.80. The broad reading of U.S. retail stocks, which goes back to 2002, charged past its high from July last month and topped out at 561.70 on Jan. 26.
The Dow Jones Industrial Average perked up 1.2 percent, or 156.82 points, to close at 12,862.23.
Department stores added 19,400 seasonally adjusted jobs in January compared with December to employ 1.6 million, while general merchandise stores, which include discounters and department stores, increased employment by 15,000 to 3.1 million. Apparel and accessories stores cut payrolls by 13,600 last month to employ 1.37 million.
“In apparel [specialty stores], yes, we lost 13,600 jobs [in January], but the prior two months added over 17,000 jobs,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics. “I think the trend here is one of modest growth in employment and clearly this time of year, there tends to be volatility in the data because it is difficult for the seasonal adjustment process to correctly pick up seasonal hiring and firing.”
Hoyt also pointed out that apparel and accessories store employment was up 1.3 percent year-over-year.
Hoyt said the gains for department stores in January, the fifth straight month of payroll increases, suggests “pretty strong growth.”
Further down the pipeline, apparel manufacturers added 100 jobs to employ 149,800, while mills making apparel fabric and yarns boosted payrolls by 700 to employ 120,300. Mills making home furnishings products decreased employment by 300 to employ 114,100.
“The headline jobs increase of 243,000 in January was far better than expected,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “Job gains were broadly spread across the private sector. Manufacturing, business services, health care and leisure and hospitality were the standouts. Hours worked rose as did hourly earnings, giving welcome income support to consumers.”
Gault said while a generally mild winter played a role in the overall employment picture, as construction workers and other outdoor industries were able to employ more workers, he added, “The job gains were far too widely spread to be just a weather phenomenon. The figures suggest a broadly based acceleration in employment growth.”