Retail isn’t creating any new jobs.
Job growth in October saw total nonfarm payroll employment increase by 261,000—2,000 less than September added but outpacing economists’ 200,000 consensus estimates—but the retail trade was noticeably absent for the second month in a row. The U.S. Bureau of Labor Statistics said on Friday that employment changed little over the month in the retail trade, the same thing it said last month when it reported on nonfarm payrolls for September. The last time retail grew was when August added 44,000.
There’s also a concern that a strong labor market is making it tougher for the Federal Reserve to determine when to pull back on rate hikes aimed at controlling inflation.
“Some cooling of labor shortages has been observed over the past few months, but October’s report emphasizes that we are not yet near significant easing of recruitment and retention difficulties,” said Frank Steemers, senior economist at The Conference Board.
Rate hikes complicate things for businesses applying for commercial loans, not to mention consumers who are seeing their purchasing power crumble.
Steemers pointed to signs that the labor market is cooling and labor shortages are easing. The pace of job growth is down, while fewer CEOs expect trouble attracting qualified workers over the next 12 months, according to a survey by The Conference Board. What that means for retail trade specifically is unclear. Most new retail jobs over the past 12 months have added to warehouse and distribution ranks than to store associate roles. Self-checkout has replaced many cashiers as well.
So far, the unemployment rate is at 3.7 percent from a 40-year low of 3.5 percent.
Steemers said it is increasingly likely that the U.S. will fall into a recession before January as the Fed rapidly tightens monetary policy.
“This may result in the unemployment rate rising to about 4.5 percent in 2023. There may be some temporary easing of labor shortages in 2023 as demand for workers diminishes,” he said.