WASHINGTON — The apparel and textile industries mirrored the overall employment declines and continued to shed seasonally adjusted jobs last month, as did apparel and accessories stores. But department stores posted a big job gain, according to the Labor Department’s monthly employment report released Friday.

This story first appeared in the March 10, 2003 issue of WWD. Subscribe Today.

U.S. companies slashed 308,000 jobs from their payrolls in February, pushing the overall unemployment rate to 5.8 percent at a time when the country is on the brink of war with Iraq.

“While today’s news was unexpected and certainly disappointing, a number of factors are thought to be responsible for the unexpected decline in payroll employment,” Labor Secretary Elaine Chao said in a statement on Friday. “We know that the economy has not been growing fast enough and that too many people have not found work.”

Department stores added 27,000 jobs in February to employ 2.53 billion workers, while general merchandise stores followed suit and posted gains of 28,000 jobs to employ 2.86 billion.

However, department stores and merchandise stores were still well below year-ago levels. Compared with February 2002, department stores last month had 24,000 fewer jobs, while general merchandise stores had 33,000 fewer jobs.

Apparel and accessories stores slashed 15,000 jobs from payrolls last month to employ 1.16 billion workers. Compared with February 2002, apparel and accessories stores lost 14,000 jobs.

“We are going through a consumer recession,” said Frank Badillo, senior economist at Retail Forward. “The economic downturn is hitting home now and it is aggravated by the threat of war. The falloff in demand in turn causes businesses to hold off on hiring and production because they expect less demand from consumers and you really see that in the retail sector.”

He said the department store employment numbers include discount store employment, which is where the growth is occurring.

“At the same time, we are seeing conventional department stores consolidate and close stores, so this is a mixed story,” Badillo said.

Meanwhile, the textile industry reduced its payrolls by another 2,000 seasonally adjusted jobs last month to employ 417,000 workers. The apparel industry also reduced its payrolls in February by 1,000 to employ 503,000 workers. Compared with February 2002, the textile industry employed 24,000 fewer people and the apparel sector employed 28,000 fewer workers.

“Last year was a stabilizing year and a consolidating year, after very heavy losses in the two previous years,” said Charles W. McMillion, chief economist of MBG Information Services. “That relative stability has held, but now firms are operating at such low levels of capacity utilization and facing weak growth in consumer demand and intense import pressures, both on prices and on volume.”

As a result, McMillion claimed, companies will be forced to shut down more capacity this year, which will lead to further job cuts. McMillion said there is a “glut of overcapacity” worldwide and prices are so low that domestic producers will have an increasingly difficult time surviving.

Badillo said he expects to see more cutbacks, although a short war with Iraq could accelerate a quicker consumer-spending rebound.

“A lot of elements of a rebound are in place,” said Badillo. “Companies have already cut back on jobs and streamlined, and the profit situation is in better shape.”

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