Retail was still adding jobs in August, although at a far lower rate than before.
The latest nonfarm payroll employment report from the U.S. Bureau of Labor Statistics shows that retail trade jobs rose by a seasonally adjusted 6,300, but that pace represented a 52 percent decline from the 13,200 jobs added in July. It was however, markedly better than the 22,700 jobs lost in June.
The June declines are partly attributed to bankrupt big-box retailers—such as home purveyors Tuesday Morning and Bed Bath & Beyond—closing their doors for the final time. And there’s little room for growth when some retailers in August, such as Express Inc., are laying off staff, while others such as the home sector’s Mitchell Gold + Bob Williams and Klaussner Home Furnishings abruptly shut down. Compounding the loss of jobs was the permanent closure of Yellow Trucking, also in August, which contributed to the bulk of the jobs lost in the trucking sector last month.
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The overall retail jobs data for August also represented an 83 percent drop from the 36,700 retail jobs added in August 2022. What isn’t clear is whether the retail sector is hitting a new normal range for job creation, or if it will remain on a roller coaster pattern as retailers tweak labor needs now that they’re relying more on technology to create efficiencies in operations and as they see supply chains normalizing from disruptions that began at the start of the COVID pandemic.
Overall, total nonfarm payroll employment rose by 187,000 in August, seasonally adjusted, and better than the 170,000 estimate from Dow Jones. In comparison, ADP Research Institute’s latest ADP National Employment Report on Wednesday found that private employers in the U.S. added just 177,000 jobs in August, well below the revised 371,000 jobs added in July.
What is different is the unemployment rate, which rose 0.3 percent to 3.8 percent from 3.5 percent in July, or up 514,000 to 6.4 million—now at its highest level since February 2022.
So what does this all mean?
For the week ending Aug. 26, 228,000 filed for first-time unemployment benefits, representing a decline of 4,000 from the prior week’s revised level. That suggests a still fairly tight labor market. But with the unemployment rate now at 3.8 percent, investors on Friday sent the Dow Jones Industrial Average up 83.8 points, or 0.25 percent, to 34,805.69 in late morning trading on hopes that the latest data is an indication that the labor market is cooling. They want a cooling labor market so the Federal Reserve can pause its interest rate increases.
Economists at Wells Fargo said in a research note on Friday that with the “labor market more clearly moving back into balance, further Fed rate hikes seem unlikely.” But because the labor market remains “tight,” they didn’t expect to see rate cuts any time soon. And while the “trend in hiring continues to cool only gradually,” the economists concluded that hiring in June and July would have been stronger if it wasn’t for the actors’ strike in Hollywood, which saw employment in the motion picture and sound recording industry fall 17,000 last month.
While the labor market is softening, job growth still remains “comfortably north of the 100,000 payrolls” number needed to keep unemployment relatively steady. That means job cuts could become the story for 2024, the Wells Fargo economists concluded.
