WASHINGTON — Retailers and apparel and textile producers all cut payrolls in December, bucking the overall trend of stronger-than-expected job growth nationwide for the month.

The dramatic move of apparel production to low-cost markets abroad continued to eat away at domestic producers last month and throughout 2006. Apparel manufacturers cut 300 jobs to employ 240,700 in December, as textile mills reduced payrolls by 1,900 to 185,600 and textile product mills cut their workforce by 100 to 166,500. For the year, the sector lost a total of 43,600 jobs.

The decline in manufacturing jobs is seen by many U.S. textile concerns as a symptom of unfair competition from countries like China, which they contend keeps its currency undervalued and subsidizes its own producers.

On the retail side, department stores, which underwent a wave of consolidations last year, cut 1,100 jobs to employ 1.6 million, while apparel and accessories stores eliminated 3,600 positions for a total workforce of 1.5 million.

The picture between the two retail channels changes, though, when seen against December 2005. Highlighting the impact of mergers on the sector, department stores cut payrolls by 38,700, as apparel and accessories stores added 12,600 workers. (For more on retail employment, see page 22.)

With big gains in the service sector, the overall economy added 167,000 jobs — well above economists’ estimates of 100,000 new positions — as the unemployment rate held steady at 4.5 percent.

The better-than-projected performance of the job market lately suggests the economy might have a little more momentum than previously thought, said Scott Hoyt, director of consumer economics at Moody’s Economy.com.

“There’s no question more jobs means more income, which means more spending power,” said Hoyt. “The risk in the longer run is if the economy stays stronger than the [Federal Reserve] would like it to, we run the risk of seeing higher interest rates down the road.”

A drag from the ailing housing market is expected to slow the economy some as 2007 wears on, said Hoyt.

This story first appeared in the January 8, 2007 issue of WWD. Subscribe Today.

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