Retail Posts Slight Job Gains in February
Retail gained 18,700 jobs in February, even as overall U.S. jobs growth slowed. Big picture, job growth is matching current economic expectations before growth resumes in 2025.
Total nonfarm payroll employment rose by 175,000 last month, while the unemployment rate rose 0.2 percentage points to 3.9 percent. January’s preliminary numbers were revised down to 229,000 from 353,000. Most of the job gains were in healthcare, leisure and hospitality and government.
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In retail, jobs at general merchandise retailers last month grew by 17,000. Slight gains were also seen at health and personal care retailers and at automotive parts and tires retailers. The gains were partially offset by losses at retailers of building materials and garden equipment and those who sell electronics and appliances.
The jobs data from the U.S. Bureau of Labor Statistics said that average hourly earnings were up by 0.1 percent in February.
According David Mericle, Goldman Sachs’ chief U.S. economist, payroll growth has averaged 231,000 over the last six months.
Economists at Wells Fargo have been expecting a gradual cooling of the labor market for months. A research report from Sarah House and Aubrey George noted that turnover continues to decline as demand for additional workers has eased and more workers are staying in their current role. In addition, data indicates that the number of workers who are quitting their jobs fell to 2.1 percent in January, marking the lowest rate in six years, excluding Spring 2020.
The data points to the “jobs market slowly settling down, consistent with wage, and thus inflation, pressures cooling without a worrisome slowdown in net job creation and overall economic activity,” they wrote. The economists concluded that the “gradual, rather than marked, softening in the labor market” will likely see the Fed wait a little longer before they begin to cut rates.
While retailers at the start of 2024 disclosed over 18,517 job cuts, many of those haven’t happened yet because they’re set to occur over a period of time. Given those numbers, and the fact that many were open positions that remain unfilled, there’s a chance that the bad news is already over on the jobs front. That’s also because many retailers made reductions in workforce as part of their new strategic go-forward plans. Most of those growth plans are set over a three-year timetable.
The Conference Board on Monday said its Employment Trends Index (ETI) slipped in February to 112.29 from a downwardly revised 113.18 in January.
“The ETI has been trending downward since hitting a peak in March 2022,” Will Baltrus, the Conference Board’s associate economist, said. “While the Index is still elevated compared to its prepandemic level and the economy has continued to add jobs through February 2024, the labor market is likely to cool off, with modest job gains expected through Q3 and Q4 of 2024.”
The Conference Board is projecting slower real GDP growth in the second and third quarters of 2024.
Economists still expect a slowing economy, but no recession this year. Economist Lauren Saidel-Baker at ITR Economics sees 2024 as the year where the U.S. economy “take a slight breath.” Not only does she expect to see a full recovery in 2025, but Saidel-Baker also has a rosy outlook “for the rest of this decade.”
While the industrial sector will be in a recession, GDP will still see growth due to consumer spending. “The consumer is coming from such an incredibly strong starting point that they are spending our way out of GDP being in a recession,” she said. Saidel-Baker said one reason why the consumer is resilient is because of the strong labor market. And while retail sales could see a slight contraction this year, she expects to see gains in the years ahead.
“That strong labor market isn’t going anywhere. It’s a long demographic trend. Our companies will need to compete for top talent and they’ll need to pay up as they have been for the past several years with above average wage gains,” Saidel-Baker concluded.
