Retail is back to losing jobs again.
The U.S. Bureau of Labor Statistics (BLS) on Friday said retail lost 11,200 positions in June. “Overall, employment in retail trade has shown little net change over the year,” the BLS said. BLS data indicates that the sector gained 23,000 jobs in May, and and added 14,100 in June last year.
Manufacturing, which includes apparel and textile factories, gained 7,000 jobs in the month.
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Overall, job growth cooled in June, as nonfarm payroll employment rose by just 209,000, not quite the 225,000-230,000 economists were looking for. The unemployment rate slipped to 3.6 percent from 3.7 percent. Government, health care, social assistance and construction all added jobs in June.
Friday’s BLS report stands in sharp contrast to the ADP report on Thursday showing private sector payrolls expanded by 497,000 jobs last month. BLS and ADP use different metrics to monitor jobs data, and the former documents government hiring.
The government hired 60,000 last month, while the 149,000 increase in private sector employment was the smallest gain since 2020, according to Wells Fargo Economics experts, discussing the still “hot” job market.
“Today’s employment report offered additional evidence that the labor market is slowly coming into better balance as job growth slows and labor supply steadily expands,” wrote economists Sarah House and Michael Pugliese in a report. “Job growth of [over 200,000] is still quite strong even if it is directionally slower than the scorching pace seen over the past year.” They also noted that a tight labor market “is still keeping wage growth about a percentage point above what would be consistent” with the Fed‘s 2 percent inflation target.
House and Pugliese expect a 0.25 percent rate hike to come out of the Fed’s July 25-26 meeting.
“Even amid more forthcoming labor supply and gradually cooling labor demand, the weight of the evidence still suggests that the labor market remains too tight to be consistent with 2% inflation,” they said
That could change in the months ahead, despite signals that the U.S. economy remains strong despite slower growth.
But consumer “resiliency” could be tested in the months ahead, according to National Retail Federation chief economist Jack Kleinhenz. Though the U.S. economy continues moving in the right direction, “economic headwinds are likely to impair spending,” he said in a statement Friday. People stashed an estimated $500 billion more in savings accounts during the Covid pandemic, some of which has propped up retail spending in the past year or so.
“The broader U.S. economy may not be in a recession, but many consumers are experiencing their own economic downturns,” said Marshal Cohen, Circana’s chief retail advisor. “The needs and expectations of budget-conscious consumers are evolving, and retailers and manufacturers need to acknowledge the shifting patterns of consumer behavior and adapt their strategies accordingly, in order to remain relevant in the current market.”
Cohen noted that rising prices in one area can cause ripple effects across other sectors. That’s one reason why there has been a pullback in consumer spending, particularly in discretionary spending. Consumers have “become more deliberate in their purchasing decisions, shying away from the impulsive purchases that are a significant source of growth for many retailers,” he said.
Retail could lose even more jobs this year as merchants shut down and shed stores.
Bankrupt Bed Bath & Beyond is closing stores, and its popular Buybuy Baby subsidiary will shut its physical locations too. Tuesday Morning, which filed for bankruptcy earlier this year, is closing 222 stores, and Shoe City has already shut all 39 locations.
Some are also closing stores, and even malls, because of shoplifting and crime. Foot Locker is planning to get rid of as many as 420 stores, including Champs Sports 125 underperforming stores.
But even as retailers rethink their store counts, some are still opening new locations. While Foot Locker plans to open more larger format Kids Foot Locker doors, other retailers are now focusing on stores with smaller footprints. Abercrombie & Fitch Co. is one example that has successfully tested a smaller store format and found ways to be more productive with less square footage. That’s a trend not likely to go away anytime soon. While that’s better for a retailer’s bottom line, those smaller locations correspondingly also require fewer store associates.
