Strong June rebound signals job growth is solid again — but substantial raises remain elusive

With a strong rebound in job growth last month, the labor market is back on solid ground. But workers are still struggling to get the substantial wage gains they’ve been craving since the end of the recession, economists said.

Here are the highlights:

  • The economy added 222,000 net new jobs, the Labor Department said — the best performance since February and well above analyst expectations.
  • The unemployment rate ticked up to 4.4% from May’s 16-year low, but because more people joined the labor force.
  • May’s job growth was revised up to 152,000 and April also was revised up, as part of a gain of 47,000 more total jobs for those two months than initially estimated.
  • Wages continued their steady but slow recent growth, increasing 4 cents to $26.25.

“Hiring is back to where it has been throughout much of the 8-year-old economic expansion,” said Mark Hamrick, senior economic analyst at financial information website Bankrate.com.

“Growth is modest, not spectacular, which is to be expected for a mature expansion.”

Job growth returns to 2016 pace

With June’s strong growth and the statistical revisions, monthly job gains have averaged 180,000 this year, close to last year’s level of 187,000.

On Monday, President Trump criticized the media for ignoring the “great jobs numbers” since he took office. The White House offered a muted response Friday, with Press Secretary Sean Spicer touting the job gains on Twitter as “great news” for U.S. workers.

Economists said the pace of job growth this year has not been great, but has been solid. And the bounce back in June allays any fears of a significant slowdown.

“This was a good jobs report. It suggests there’s still a fair amount of vitality in the U.S. labor market,” said Nariman Behravesh, chief economist at IHS Markit, a business research and analysis firm.

But the report probably overstated the strength of the market somewhat because it was boosted by a gain of 35,000 net new jobs in state and local government after the sector shed 8,000 positions in May, he said.

The June gains likely represent a temporary jump as school districts made new hires for the fall, Behravesh said. He expected job growth in coming months to be in the range of 150,000 to 180,000.

Retail gains jobs for first time since January

Customers shop at an Aldi grocery store in Chicago on June 12.
Customers shop at an Aldi grocery store in Chicago on June 12. (Scott Olson / Getty Images)

June’s job growth was boosted by large increases in hiring in the healthcare and social-assistance sector, as well as by local governments.

But the most notable move was by retailers. The sector added 8,100 net new jobs in June after shedding 7,200 the previous month.

From February through May, retail payrolls declined by 79,400 jobs as the sector struggled with the growing shift to online shopping.

“The gain in June shows that the industry is still very much meeting the demands of consumers and households,” said Jack Kleinhenz, chief economist for the National Retail Federation.

He cautioned that “one month does not make a trend,” a point echoed by other economists.

“We won’t see sustained employment growth in the retail sector,” said Cathy Barrera, chief economic advisor at ZipRecruiter, the Santa Monica job-hunting site.

“Between the competition with online options for consumers and for new technologies that are replacing workers in stores — self checkout is one example of that — I don’t think those jobs are going to be there in the long run,” she said.

A higher jobless rate is actually good

(@latimesgraphics)

The unemployment rate rose 0.1 percentage point last month after hitting its lowest level since 2001 in May. But the increase, to 4.4%, was for a good reason — 361,000 people joined the labor force a month after it contracted.

That nudged up the percentage of working-age Americans either working or actively looking for a job to 62.8%. That labor force participation rate still is near a four-decade low, and economists said the increasing retirement of baby boomers makes it difficult to boost the level significantly.

The participation rates for men and women ages 25 to 54 have almost gotten back to their pre-recession levels, Barrera said. But for Americans ages 16 to 24, the recovery has been slower.

“It makes sense that this is the last group to recover,” she said. “There just weren’t a lot of jobs available for young people high school-age or college-age during the recession.”

Some of them have opted to stay in school longer to boost their job qualifications, Barrera said. Getting those Americans back in the workforce will help tighten the labor market and lead to increased wages.

Wage growth is still struggling

Average hourly earnings increased 4 cents last month to $26.25, a slight improvement over May’s gains.

For the 12 months ended June 30, wages have increased 2.5%. That’s a slight increase over the 12-month period ended May 31 and above the low rate of inflation. But it’s still short of the stronger growth economists have been hoping for as the labor market tightens.

“If wages accelerate, that will encourage more people who might have given up looking for work to start looking again,” said Jed Kolko, chief economist with employment website Indeed.com. “That’s why wages are an important and the most troubling piece of the puzzle right now.”

With unemployment low, employers should be forced to increase wages to lure new workers and keep existing ones.

But some of the biggest job gains in June were in lower-wage sectors, like healthcare and temporary workers, which kept wage growth down, Kolko said

“It’s unclear how much the slower wage growth is due to long-term factors, like productivity slowdown and demographic shifts, and how much of it could be reversed by a tighter labor market and employers bidding up wages,” he said.

Federal Reserve monetary policymakers have been expecting faster wage growth as the unemployment rate falls.

Still, the job-creation figures for June should provide relief to central bank officials, who have been increasing a key short-term interest rate in large part because of the strength of the labor market.

In June, the Fed nudged the rate up for the third time in six months. Even though the pace of job growth has moderated this year, Fed Chairwoman Janet L. Yellen said the labor market “continues to strengthen.”

If job growth remains solid, the Fed is expected to raise the rate again before the end of the year.

L.A. Times

July 7, 2017

 

RETAIL SALES GREW 0.3 PERCENT IN MARCH

WASHINGTON – Retail sales in March increased 0.3 percent seasonally adjusted over February and 3.5 percent unadjusted year-over-year, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“Various factors were at play in the first quarter, but we are again seeing a pattern similar to previous years — consumer spending was weak but is expected to pick up as we move through the year,” NRF Chief Economist Jack Kleinhenz said.

“A lack of pricing power continues to plague the retail industry,” Kleinhenz said, noting that Consumer Price Index numbers released today showed prices reversing course in March. “There is no doubt that weak pricing power led to the bumpy period for retailers in the first part of this year.”

On a three-month moving average, retail sales have grown 2.8 percent year-over-year. When looking at business lines, performance in March was again uneven as clothing and accessories and general merchandise saw slight gains while there were declines in building materials and supplies and sporting goods, likely due to winter weather. Nonetheless, the sectors with declines showed increases year-over-year.

A few specifics include:

  • Online and other non-store sales increased 0.6 percent over February and increased 11.4 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores increased 1 percent seasonally adjusted from February but decreased 2.5 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.3 percent seasonally adjusted over February and remained even year-over-year.
  • Electronics and appliances stores’ sales increased 2.6 percent seasonally adjusted over February but decreased 0.4 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales decreased 0.3 percent from February but increased 3.3 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores decreased 1.5 percent seasonally adjusted from February but increased 6.3 percent unadjusted year-over-year.
  • Sporting goods stores’ sales decreased 0.8 percent seasonally adjusted from February and decreased 4.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.1 percent seasonally adjusted over February and increased 5.3 percent unadjusted year-over-year.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.

April 14, 2017

RETAIL SALES GREW 0.2 PERCENT IN FEBRUARY

February retail sales grew 0.2 percent seasonally adjusted over January and 0.8 percent unadjusted year-over-year, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“Sales growth held up well, given warmer than normal weather and tax refund delays,” NRF Chief Economist Jack Kleinhenz said.

“While consumers benefit by purchasing more for less, the top-line retail numbers reflect a lack of pricing power and, in many cases, hide underlying consumer demand.”

“While consumer spending in the first quarter has been erratic and most often weak, it registers positive improvement as the year continues,” Kleinhenz said.

On a three-month moving average year-over-year, retail sales have grown 2.8 percent. When looking at business lines, performance in February was very mixed as electronics and appliance stores saw declines while building materials and garden supplies saw solid growth.

A few specifics from the report include:

  • Online and other non-store sales increased 1.2 percent over the previous month and increased 8.2 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores decreased 0.5 percent seasonally adjusted from the previous month and decreased 1.1 percent unadjusted year-over-year.
  • Sales at general merchandise stores decreased 0.2 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales decreased 2.8 percent seasonally adjusted over the previous month and decreased 9.8 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales increased 0.7 percent over the previous month and increased 1.4 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 1.8 percent seasonally adjusted over the previous month and increased 3.7 percent unadjusted year-over-year.
  • Sporting goods stores’ sales decreased 0.4 percent seasonally adjusted over the previous month and decreased 6.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 2.7 percent unadjusted year-over-year.

FOLLOWING JOB GAINS IN JANUARY, RETAILERS SCALE BACK IN FEBRUARY

Retail industry employment decreased by 31,300 jobs in February from January, offsetting gains made the previous month, the National Retail Federation said today. The retail numbers exclude automobile dealers, gasoline stations and restaurants. Despite the correction in retail, the overall economy gained 235,000 jobs in February, the Labor Department said.

“Mild weather contributed to retailers scaling back employment in February, reversing the gains the industry made in January,” NRF Chief Economist Jack Kleinhenz said. “However, the surge in consumer and business optimism may have propelled the economy-wide increase in jobs last month and supports our prediction for stronger consumer spending and retail sales for 2017.”

Average hourly earnings were up 2.8 percent year-over-year, compared with 2.5 percent in January.

The Labor Department said February unemployment fell to 4.7 percent, down from 4.8 percent in January.

RETAIL SALES UP 0.4 PERCENT IN JANUARY

January retail sales grew a solid 3.8 percent unadjusted year-over-year and 0.4 percent seasonally adjusted from an already-strong December, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment.”
Jack Kleinhenz
NRF Chief Economist

“The retail industry started the year on a high note, continuing the momentum from the 2016 holiday season. The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment,” NRF Chief Economist Jack Kleinhenz said.

“We haven’t seen strong January growth in several years, which indicates that consumers are increasing their spending and remain the leading driver of the economy,” Kleinhenz said.

There were broad-based monthly increases across the majority of sectors, with the exception of non-store, which was flat in January.

A few specifics from the report include:

  • Online and other non-store sales were flat over the previous month and increased 14.5 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores increased 1 percent seasonally adjusted from the previous month and increased 0.4 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.9 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales increased 1.6 percent seasonally adjusted over the previous month and decreased 1.7 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales were flat over the previous month and decreased 0.3 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 0.3 percent seasonally adjusted over the previous month and increased 6.6 percent unadjusted year-over-year.
  • Sporting goods stores’ sales increased 1.8 percent seasonally adjusted over the previous month and decreased 3.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 9.4 percent unadjusted year-over-year.

Christmas Sales Are Expected to Be Strong This Year

Retail sales should jump a solid 3.6% this year

Finally.

U.S. retailers can expect a strong holiday season this year, buoyed by income gains and rising consumer confidence according to the National Retail Federation.

The industry group forecast holiday season sales—excluding car sales, gas and restaurants—would rise 3.6% to $655.8 billion, well above the 10-year clip of 2.5% growth and better than the 3% rise for the 2015 Christmas period. And online business should be a big help, rising as much as 10% during the period.

The holiday season is crucial for many retailers, making or breaking the year for some chains and generating as much as 30% of sales.

2016 has proven to be a challenging year so far,particularly for stores like Macy’s, M 0.77% Kohl’s KSS 0.91% and Target TGT -0.04% , which had to deal with sales declines last quarter. Shoppers are moving online and also away from apparel, making it tough going for many such chains. A notable exception has been Walmart WMT -0.36% , which has fared well thanks to improved customer service, fewer out-of-stock items, and an improved e-commerce site.

And as Walmart and Amazon.com AMZN -0.32% have shown so far this year, retailers will engage in pricing warfare to outdo one another: Target for one has said it needs to re-emphasize its low prices in its marketing given the competitive environment. And weak traffic at hundreds of malls is hurting the like of Macy’s and Gap Inc GPS -0.18% .

But at least shoppers are in a better mood heading into the holiday season. “Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” NRF chief economist Jack Kleinhenz said in a statement, adding that anxiety about the outcome of the election could weigh on shoppers’ mood.

And once again, retailers will have to fight extra hard with Amazon to give shoppers a reason to come to stores, or at least to their websites. Last year was the first year more shoppers went online on Black Friday than to stores. This year eMarketer expects digital sales to surpass 10% of total holiday season revenue for the first time, while a recent study found that nearly half of all online shopping searches begin on Amazon.

In a separate forecast, PwC estimated holiday spending would increase 10% during the 2016 season, though stores would struggle to get their share since shoppers will be spending proportionately more on experiences and travel.

a OCTOBER 4, 2016,

RETAIL SALES GROW AT ‘SOLID’ PACE, UP 0.8 PERCENT IN JUNE

Retail sales (excluding automobiles, gasoline stations and restaurants) continued to grow in June and were up 5.1 percent year-over-year, the National Retail Federation said today. Retail sales rose 0.8 percent unadjusted over May, according to NRF’s calculations.

“The consumer sector remains a visible and healthy force in the economy and is expected to fuel growth in the second half of 2016.”
Jack Kleinhenz
NRF Chief Economist

“June’s retail sales grew at a solid pace on the heels of a strong showing for both May and April,” NRF Chief Economist Jack Kleinhenz said. “Consumer spending rebounded strongly in the second quarter after two weak previous quarters. Additional job gains and rising wages are supporting the strength in retail sales and should provide momentum going into the second half of 2016.”

Most retail segments reported monthly gains, except for clothing and clothing accessories that reported a decrease and electronics that remained flat. Outsized gains were evident for building materials and supplies and were probably related to the strength in the housing market. In June, the three-month moving average of retail sales on a year-over-year basis increased 3.8 percent unadjusted.

“The bottom line is that today’s data shows that the consumer sector remains a visible and healthy force in the economy and is expected to fuel growth in the second half of 2016,” Kleinhenz said.

A few specifics from the report include:

  • Online and other non-store sales increased 1.1 percent seasonally adjusted over the previous month and 13.9 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores decreased 1.0 percent seasonally adjusted over May and decreased 0.1 percent unadjusted over last year.
  • Sales at general merchandise stores increased 0.4 percent seasonally adjusted over the previous month and 1.1 percent year-over-year.
  • Electronics and appliances stores’ sales stayed flat at 0.0 percent seasonally adjusted month-to-month and decreased 3.7 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales increased 0.5 percent over the previous month and 3.0 percent unadjusted over last year.
  • Sales at building materials and supplies stores increased 3.9 percent over the previous month and 7.4 percent unadjusted year-over-year.
  • Sporting goods stores’ sales increased 0.8 percent seasonally adjusted month-to-month and 6.1 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted month-to-month and 8.2 percent unadjusted year-over-year.

Robin Roberts July 15, 2016

Survey: Families stock up for back to school after tightening belts last year

Families that decided to get another year’s use out of backpacks and laptops during last summer’s back-to-school shopping season are ready to reopen their wallets, according to a National Retail Federation survey released Thursday.

An average family with children in the elementary to high school range will spend about $673.57 on back-to-school items including clothing, electronics and other supplies, up nearly 7 percent from last fall.

Total back-to-school spending is expected to hit $27.3 billion this year. Add in school-related spending by families with college students, and the figure rises to $75.8 billion, up from $68 billion the year before.

Average household back-to-school spending has grown over the past decade, but often rises and falls as families stock up one year, then cut back as they get a second year out of longer-lasting purchases, said Ellen Davis, the retail trade group’s senior vice president of research and strategic initiatives, on a media call discussing the survey results

The $673.57 figure is up from $630.36 last year but only slightly tops the $669.28 the average family planned to spend in 2014, according to the NRF.

“The jeans might be too tight this year and the glue sticks might be dry and it’s time for a new iPad. That means a lot of families are going to be heading to the stores and online for back to school,” Davis said.

Families also may be feeling a little more confident about the economy, encouraging them to spend a little more, said Jack Kleinhenz, the NRF’s chief economist, on the call.

An increase in the number of shoppers with students going to college, who typically need more big-ticket items than families with younger children, helped boost overall school-related spending even as the amount the average family with college students planned to spend, $888.71, dipped slightly from last year, according to the trade group.

An increase in spending on electronics for younger students could be driving some of the growth in back-to-school spending as college spending stayed relatively flat, Davis said.

“Ten years ago, you saw a lot of college freshmen making big electronics purchases,” she said. “Now you’re seeing it shift to younger grades.”

Shoppers also said they’re planning to start back-to-school shopping earlier this year to spread out their budgets. There was a 10 percent increase in the percentage of families doing back-to-school shopping online, but discount stores are still the most popular choice, followed by department stores and clothing stores, according to the survey.

The survey, conducted for the NRF by Prosper Insights & Analytics, polled 6,809 consumers for a week in late June and early July.

lzumbach@chicagotribune.com

July 21, 2016

Twitter @laurenzumbach

You’re spending more on shirts and sweaters

Sorry, shoppers.

After two years of declining apparel prices, the latest batch of government reports shows consumers are finally spending more on T-shirts and sweaters.

According to the Consumer Price Index released Wednesday, the apparel index in February posted its largest increase in seven years, rising 1.6 percent. It was the second straight month of higher apparel prices, after they ticked up 0.6 percent in January.

Prior to January, apparel prices had fallen for four straight months.

This inflection signals that retailers’ efforts to trim their inventories — and as a result, drive more full-price selling — are starting to take hold. But it’s still too early to call victory.

“I think it’s probably more of an indication of a comparison issue,” Perkins said. “We had a lot of clearance merchandise obviously in January, and coming into February you finally see some more full-price selling.”

Discounts were particularly prevalent during December and January, as unseasonably warm weather left retailers with a glut of coats and jackets.

But over the past few months, retailers from Express to Jos. A. Bank have taken steps to reduce shoppers’ reliance on steep discounts. They’ve done so with varying success.

While a more thoughtful promotional strategy and better management of its merchandise helped Express beat Wall Street’s comparable sales and earnings estimates, Jos. A Bank’s comparable sales plunged 32 percent during the fourth quarter. Revenues at the retailer, which was acquired by Men’s Wearhouse in 2014, have taken a beating since it did away with its famous Buy One Get Three Free promotions.

Woman shopping

Hill Street Studios | Getty Images

Jack Kleinhenz, chief economist for the National Retail Federation, said he is hopeful that February’s results are a sign that retailers are starting to see some “stickiness” on prices. But he also expressed concern that they received a boost from favorable weather, or that the number could receive a downward revision next month.

“I’m pleased to see [the data] to a certain extent, but I’ve also go to look at it with squinted eyes,” he said. “We need to see some notable changes on more than just one month.”

Though Perkins was skeptical that apparel prices would continue their recent ascent, he said the steep declines the category experienced last year are unlikely to continue. Instead, he predicts clothing prices will stay stable, particularly if consumers respond favorably to the new spring product.

Paired with Tuesday’s retail sales data, which showed that revenues at clothing stores were up 3.2 percent during the first two months of the year, Perkins said there are “burgeoning signs” that that apparel could be bouncing back.

Still, he cautioned that retailers are facing numerous headwinds, including the growth of fast-fashion and off-price retailers, wage pressures and necessary investments into digital shopping.

“Apparel has a chance to rebound here,” he said. “It really has been neglected over the past several years.”