While the jobs market in April was a bust, apparel and accessories stores managed to add 10,000 to their staff and more hiring could be on the way.
On Monday, the Conference Board said its Employment Trends Index rose in April to 105.44, up from an upward revision to 102.65 in March and now up 45.7 percent from a year ago when stores temporarily closed and mass furloughs quickly followed.
“Despite the disappointing April jobs report, the Employment Trends Index significantly increased in April, suggesting strong employment growth in the coming months,” Gad Levanon, head of The Conference Board Labor Markets Institute, said. “Most of the Index’s components are rapidly improving. However, the number of employees in the temporary help industry, usually a strong leading indicator of employment, declined in April. Rather than signaling a weak outlook for job growth, it may reflect some substitution in employment as employers hire more regular employees and end contracts with temporary workers.”
Levanon said that in the coming months, his team expects job creation to continue, but possibly at a slower pace. “A slew of indicators measuring recruiting difficulties, quit rates, and wage growth suggest the US economy is experiencing an historical, though probably temporary, labor shortage. Among the shortage’s many effects, it may put a damper on job growth,” he said.
The Employment Trends Index is comprised of eight components, and currently six are driving April’s increase, according to Levanon. The largest positive contributor was the initial claims for unemployment insurance. That was followed by the percentage of respondents who say they find “jobs hard to get,” the ratio of involuntary part-time to all part-time workers, real manufacturing and trade sales, industrial production and the percentage of firms with positions they can’t fill right now. The other two components that haven’t turned positive yet are the number of employees hired by the temporary-help industry and job openings.
Data shows that a “turning point in the number of jobs is about to occur in the coming months,” Levanon said.
UBS economist Andrew Dubinsky said a further reopening plus the promising outlook for Covid risks and longer work weeks should result in a faster job growth outlook, as companies need to hire additional people to handle growing workloads.
The economist attributed the lackluster April report in part to reopening gains in leisure that failed to spill over more broadly, and supply headwinds that might have held back the pace of growth.
“A bright spot in the report is private payroll income is now 1.8 percent above pre-Covid levels reflecting the longer hours [and] stronger wages in April, and the stronger recovery to date in higher-wage industries,” Dubinsky said.
Dubinsky also cited temporary layoffs as a factor for April’s jobs report, noting that laid-off people actually increased to 21.5 percent from 20.9 percent as a percentage of those who are unemployed and that the average pre-Covid was 12.5 percent.
“These individuals have a much higher re-employment rate than the rest of the unemployed. The fact that they still are a large fraction of the total unemployed should favor further dynamism in the labor market going forward,” Dubinsky said, adding that rapid wage growth also may have temporarily constrained the labor supply.
With the U.S. mulling what a “new normal” will look like, upcoming changes around remote work and education could have “enormous implications” for the retail sector, The NPD Group’s Don Unser told the Retail Industry Leaders Association.
Unser said retailers should focus on the idea of repositioning rather than recovering. Some sectors, including consumer technology and small home appliances, actually grew during the pandemic, meaning that new shopping preferences could stick around.
Unser expects that there could be as many as 28 million new work-from-home professionals this year versus 2019 levels. About 20 to 35 percent of the workforce will still work part-time or even full-time at home when pandemic rules are lifted, which will impact spending for categories including technology, apparel and footwear.
In addition, with more school districts reopening, retailers could see a bit of early back-to-school spending. Unser noted that in early March, there was increased spending—by tens of millions of dollars—for kids’ backpacks, apparel and performance and leisurewear footwear, surpassing 2019 levels. The sales volume was still lower than traditional BTS sales in the fall. And it was combined with an earlier Easter plus stimulus money from the federal government, making the true impact on BTS sales somewhat difficult to quantify, Unser concluded, noting that early the purchasing could be a trend that bears watching.
And while apparel spending right now has seen an uptick, that’s likely to change down the road. At some point, as more state economies reopen, spending on apparel and accessories will shift as shoppers begin to use some of their discretionary funds for experiences, such as travel and entertainment, Unser cautioned.