A Just-right Jobs Report Despite a Mix in Retail
When it comes to the job market, good, but not too good is just about perfect.
The economy added 187,000 jobs in July as the unemployment rate ticked down to 3.5 percent from 3.6 percent in June, according to the Labor Department’s latest reading of the job market on Friday.
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In fashion, department stores cut 5,400 jobs between June and July to employ 957,300 as apparel and specialty stores added 600 jobs for a total of 1.1 million people on the payrolls. Retail overall added 8,500 jobs, with 5,900 of those positions in food and beverage stores.
Those figures only show part of the retail pictures as they count jobs within the four walls of brick-and-mortar stores and not those in corporate headquarters or to facilitate e-commerce.
But altogether it’s a job market that’s just about where it needs to be.
The Federal Reserve has been looking to bring down inflation by ratcheting up interest rates at a rapid clip over the past year. The idea is to cool spending — by businesses and consumers — and, in turn, bring down prices before the economy overheats and melts down.
But changing the benchmark interest rate that impacts everything from monthly credit card charges to 30-year mortgages is still a rather blunt tool and most economists were expecting it to lead to a recession this year.
That would likely bring down inflation, but not without pain for businesses and consumers, a dynamic that would hit retail and fashion companies on both the front end and back ends of their businesses.
Instead, prices are moderating and jobs are holding up, putting the economy in a sweet spot to make a soft landing.
That would mean getting inflation back down to the Fed’s target of 2 percent without a recession.
Even if there is something of a bump on the landing, the economy is much better than experts projected at the beginning of the year.
Still, the opinions that really count are those of Fed chair Jerome Powell and his colleagues on the panel that decides if the economy is running too hot or too cold and sets interest rates accordingly.
“The Fed’s going to look at this job report positively,” said Erik Lundh, principal economist at The Conference Board. “[The market] is not falling apart, but it is cooling. The June numbers were revised down as well so it shows at least some progress.”
In addition to the raw figures of how many jobs were added, the report showed that average weekly hours worked ticked down to 34.3 last month from 34.4 in June as hourly earnings rose to $33.74 from $33.60.
“A lot of employers, instead of laying people off, they’re just cutting down hours a little bit,” Lundh said. “Companies are going to be reluctant to let people go unless they absolutely have to.”
That’s the kind of moderation that can ease the fears of consumers and businesses.
“The economic reports that we’re getting, whether it’s retail sales or the job report or [the Consumer Price Index], they’re all trending in a way that says we could get out of this inflation mess without really doing any major damage to the economy,” Lundh said.
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