WASHINGTON — Specialty stores and discounters added jobs in January, while department stores cut payrolls and the overall unemployment rate rose slightly, the U.S. Department of Labor’s monthly employment report revealed Friday.
Apparel and accessories stores added 3,800 seasonally adjusted jobs to employ 1.3 million in January, while general merchandise stores, a category that includes discounters and department stores, added 4,400 jobs to employ 3.1 million. Department stores shed 1,000 jobs to employ 1.3 million.
“It was definitely a strong report,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics. “We had better than expected job growth for January, big upward revisions in November and December, strong average hourly earnings gains and a significant increase in the labor force and labor force participation rate,” which nudged up the unemployment rate for the “right reasons,” he said.
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Average hourly earnings rose 0.5 percent in January after falling 0.2 percent in December.
“That rate was probably helped by an increase in the number of states where [higher] minimum wage rates took effect at the start of the year, which suggests it will probably not be repeated again but it will also not be reversed,” Hoyt said. “The gains should be sustained and a fair bit may have gone to lower-income workers who are inclined to spend. I do think this bodes well for retailers.”
Jack Kleinhenz, chief economist at the National Retail Federation, also pointed to wage growth as a positive for retailers.
“While the unemployment rate ticked up, mostly due to a surge of Americans back into the workforce, household jobs increased along with the labor participation rate,” Kleinhenz said. “Another good signal from the January jobs report is the rise in wage growth, which increased 0.5 percent. That increase suggests higher wage and salary growth is likely going forward.”
Kleinhenz said there is a “general attitude” that the employment growth is “solid” and will likely continue in a positive direction. “Our economy seems to be normalizing,” he said.
In the overall economy, employers added 257,000 jobs as the unemployment rate rose to 5.7 percent from 5.6 percent in December.
Doug Handler, U.S. economist at IHS Global Insight, said improvement in two measures — the labor force participation rate and hourly average earnings — will help support the current economic expansion.
“The gains in average hourly earnings will translate into significant buying power among consumers in light of the recent decline in inflation,” Handler said. “The recent employment growth in the construction and manufacturing sectors signals solid levels of business confidence and augers well for business investment, apart from the activities related to oil extraction.”
Handler added that the employment report indicates that the economy is “well on its way to faster growth.” IHS is forecasting 3.1 percent growth in overall real GDP growth this year, a significant increase from 2.4 percent GDP growth last year.
In manufacturing, textile mills making apparel fabrics and yarns added 1,000 jobs to employ 119,400, while employment at mills making home-furnishing products fell 1,400 to 114,400. Apparel manufacturing employment rose 2,200 to 140,600 last month.