WASHINGTON — In the final employment report before Tuesday’s presidential election, the Labor Department reported that specialty stores shed jobs in October as department stores and general merchandisers boosted payrolls.
Apparel and accessories stores cut a seasonally adjusted 15,600 jobs from payrolls last month to employ 1.36 million, while department stores added 2,800 jobs to employ 1.32 million. General merchandisers, a category that includes department stores and discounters, added 9,800 jobs to employ 3.22 million.
In the broader retail category, employers cut 1,100 jobs to employ 15.9 million on a seasonally adjusted basis in October.
In the overall economy, employers added 161,000 jobs, as the overall unemployment rate ticked down to 4.9 percent in October from 5 percent in September.
The improving employment picture in the overall economy is likely to add further fuel to Democrats’ argument that the policies of the Obama administration should be continued and that, come Tuesday, Hillary Clinton should be elected president. Her rival Donald Trump, on the other hand, has tapped into an overall disaffection among white males without a college degree who believe the U.S. economy has left them behind. Trump’s appeal particularly resonates in the old Rust Belt states whose economies previously relied on heavy industry.
Apparel employers cut 1,800 seasonally adjusted jobs to employ 129,800, while employment at mills making apparel fabric and yarn remained unchanged at 112,200. Textile product mills shed 2,400 jobs to employ 114,300.
Retailers have been facing other headwinds in the past several months.
“There is not a lot of pricing power right now and the second big thing has been the move of apparel sales online,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics, noting those factors have impacted employment at brick and mortar stores.
He also noted that retail sales have been weak, which weighs on hiring decisions. On a year-over-year basis through September, department store sales were down 6.4 percent, “one of the largest year-over-year declines we have seen in a while,” Hoyt said.
General merchandise stores posted a year-over-year decline of 2.5 percent in September, while sales at specialty stores were up 0.7 percent in September compared with a year ago. But Hoyt noted that specialty store sales have been down on a year-over-year basis in four of the last seven months in that sector.
Some economists said another underlying factor modestly impacting hiring practices has been the contentious presidential election.
“It is possible it has had a small effect on hiring in the aggregate. In a period of heightened uncertainty, businesses are sometimes less likely to spend and that includes spending on new employees,” Hoyt said. “The uncertainty should be lifted if Clinton wins but it could ratchet up if Trump wins.”
“Overall workforce employment gains in October were healthy but retail jobs dipped slightly, possibly reflecting retailers adjusting for the edgy political environment, extreme weather, and record-high average temperatures,” said Jack Kleinhenz, chief economist at the National Retail Federation. “However, the jump in hourly earnings is very encouraging for the consumer spending outlook as we kick off the holiday season.”
Despite the drop in retail employment, average hourly earnings rose 2.8 percent, the largest increase since mid-2009, he noted.
Nariman Behravesh, chief economist at IHS Markit, said the October employment report was “decent but slightly below the average of the past few months.”
Behravesh said the report “confirms” that real GDP is “on track” to grow in the 2 to 5 percent range in the next year, predicting monthly gains of approximately 170,000 jobs.
He warned that a recent uptick in productivity, however, could slow down employment growth.
“The really good news in the past couple of months has been the acceleration in wage inflation,” Behravesh said. “This means that the tightening in the labor market is finally beginning to benefit workers — and will support stable consumer spending growth. This gradual acceleration in wages can be expected to continue over the next couple of years.”
Taken together, job growth, accelerating wage inflation and other positive data on the U.S. economy means that the “likelihood of a Fed rate hike in December is now very high,” he added.