WASHINGTON – Retailers added jobs across the board in January, while employment grew at a slower than anticipated pace in the broader economy, the monthly U.S. Labor Department report revealed Friday.
Apparel and accessories stores boosted payrolls by a seasonally adjusted 13,300 jobs to employ 1.37 million last month. Department stores added 13,200 to payrolls to employ 1.33 million and general merchandise stores, a category that includes department stores and discounters, added 15,400 jobs to employ 3.17 million.
“Retailers had a very good month, which was a little surprising given the weather factors in January, which was warm at the start of the month but ended with a big snowstorm at the end in the Northeast,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics.
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Hoyt said all three retail sectors – specialty stores, department stores and general merchandise stores – posted declines in December, making January a “payback” month.
Apparel and accessories stores, for example, nearly made up in January for a loss of 17,500 jobs in December. And year-over-year employment in the sector was up 20,600, Hoyt said.
He noted that spending increases, driven by solid wage growth, are expected to give employers confidence in hiring throughout the year, despite the slowdown in the rise in employment in the broader economy in January.
Average hourly earnings rose 0.5 percent in January and 2.5 percent year-over-year, the most since July 2009, according to IHS Global Insight.
“The big increase in average hourly earnings is very encouraging for retailers as people will have more money in their pockets to potentially spend,” said Jack Kleinhenz, chief economist at the National Retail Federation, adding that the unemployment rate dipped below 5 percent for the first time since February 2008.
“The gains in retail jobs in January indicate consumers continued to shop even after the holiday season came to a close,” Kleinhenz said. “Clothing and department stores scored well for job gains, with home-related retail sectors such as furniture and electronics also showing solid gains.”
In the overall economy, employers added 151,000 jobs in January and the unemployment rate fell to 4.9 percent from 5 percent.
While retail was a bright spot, adding 58,000 jobs last month, other sectors were weak and the total employment gain fell below economists’ expectations. The private educational services sector lost 39,000 jobs last month, while employment in transportation and warehousing fell by 20,000 jobs. The mining sector also posted losses.
In manufacturing, employment in textile mills making apparel fabrics and yarns rose 1,000 to 116,500, while employment at mills making home furnishings products increased 1,500 to 118,300. Apparel manufacturers cut 1,100 jobs to employ 134,900.
“Weak January hiring likely reflects seasonal payback” for “robust hiring” in November and December, which added 280,000 jobs and 262,000 jobs respectively, said Nariman Behravesh, chief economist at IHS.
Behravesh said the “best piece of news” in the employment report was the increase in average hourly earnings.
“While the headline payroll job gains were below expectations and a disappointment, the torrid growth rate of the last quarter was not sustainable,” Behravesh said. “Most of the other data for January was more upbeat: the unemployment rate fell (even with a hefty increase in the labor force), hours and labor force participation edged up, and—most promising of all—average hourly earnings rose the most in nearly seven years.
“The fact that payroll gains ‘fell back to earth’ is not necessarily a bad sign, and is certainly more consistent with an underlying growth rate that is around 2.5 percent,” he added.“Most indications are that the job market in the U.S. is on a solid footing—and improving.While there are clearly some weak spots in the economy, there are also many sectors where employment growth remains robust.”
IHS is forecasting that employment will grow in the 200,000 to 220,000 range in the near future but will likely weaken somewhat later in the year.