Retail trade was the weakest part of today’s job report.
Retail trade lost 30,000 jobs but 35,000 of them came from general merchandise stores.
Reported jobs in general merchandise stores declined by 89,000 since October.
Nonfarm Employment Month-Over-Month Changes
General Merchandise Store Employment
General Merchandise Store Employment Year-Over-Year
General Merchandise Store Employment Since October (in Thousands)
|Date||General Merchandise||Loss vs Prior Month|
|Loss Since October||89.3||89.3|
Retail Trade Hours
Retail Trade Hourly Earnings
Retail Trade Hourly Earnings Year-Over-Year
Is This Big Deal?
With large job gains reported elsewhere over the past few months, is this a big deal?
Yes, it is.
Part of the problem for big box retails is a consumer shift towards online shopping. But it also reflects weaker than expected consumer spending in general.
Recent Retail Headlines
- February 21: Macy’s earnings: Shifts in retail are hurting major players
- February 21: Wal-Mart earnings fall, but online sales surge
- February 28: Target shares dive on earnings outlook, price cut plans
- March 23: GameStop retail stores saw 13 percent revenue drop in the fourth quarter
BAT in Play
This weakness is ahead of tax reform including a Border Adjustment Tax (BAT) proposal by House Speaker Paul Ryan and President Trump.
Store expansion plans will be cut back. Expansion plans cutbacks will filter into construction activity, hiring, shipping and of course employee hiring.
The ripple effect, although not immediate as building underway does not stop, is potentially huge.
General Merchandise weakness is on top of a confirmed slowdown in the auto sector.
- Wild Miss in Expected Jobs: Economists Blame the Weather
- Don’t Worry Weakness is Transitory: Fed Expects a Second Quarter Rebound, Higher Equity Prices
- Another ISM/PMI Divergence: Non-Manufacturing
- Illinois Revenue Freefall: Fiscal Year-to-Date -8.1% and Worsening
- Auto Inventories Highest Since July 2009: Concerns Mount, Ford Vehicle Sales Decline 7.2%, GM Up 1.6%
- Auto Sales Final Numbers: Down 5.7%, Two-Year Low; Don’t Worry, It’s Just a Plateau!
- Construction Spending Rises 0.8% vs. 1.0% Expectation: Nonresidential Rolling Over?
The debate over soft vs hard data will be over on April 28 when the preliminary GDP number is posted. I highly doubt it will be any good.
Mike “Mish” Shedlock
Sales taxes are up.
If you tax something, you get less of it.
Pretty darned simple.
Victor Adam Smith said:
It would be very revealing if one could “tease” out how much of this “drop” in Sales Revenues is due to “lower retail prices” and now much is due to a “decline in consumer demand.”
In some areas of business (even publishing for goodness sake) there are “price wars” occurring now.
Plus when all the “Big Boxed In” stores are all selling the same sort of merchandise…….
Well who gives a care about buying the same old crap, again!
Medex Man said:
@robs — “If you tax something, you get less of it. Pretty darned simple.”
Apparently not simple enough for the criminals in government.
F U Paul Ryan. F U McCain. F U Pelosi.
And most of all F#CK YOU OBAMA
Just wait until the California Transportation tax kicks in….that should really add to the slow down
I know this is off subject but Trump is dragging the US into war. This, I suppose was not to be unexpected, and it reveals that the establishment is still in charge. With healthcare, now Syria. We have been fooled again.
Nobody has been fooled. The War Party, namely the Neo-Con GOP and Liberal Interventionist Democrats, are a formidable coalition. Very strong and at this game longer, with experienced players. Deep State Intel Forgers provide surveillance and wiretap resources for blackmail and blackballing. Media Whores are a 24×7 Propaganda Machine functioning like Orwell’s Big Brother in laying out War Party thinking/talking points. Not called the establishment for nothing. But not infallible and omnipotent. War and the Preparation for War is the mother’s milk of the military industrial complex, big business for the USA. 60 or 90 days of a new president is an insignificant amount of time, and to expect almost a century of policy to change in that time is a guarantee for disappointment. Give it more time before jumping to a conclusion. Otherwise you are like the instant-analysis idiots/liars in the Syria poison gas game (which is a good business for Germany, which sells the stuff, a fact rarely mentioned).
Mathew Marty said:
Which is best for the economy in the long run, Consumption (consumer sales) or investment?
I think less consumer consumption (mostly crap that we don’t need) and more business investment is a better mix for the economy than we have had for a long time.
I still think Q1 GDP will be OK (2.0%) and Q2 will be better (2.5%). If the do nothing GOP could pass tax cuts, we might hit 3% this year.
John Smith said:
We can always count on you for these off the wall predictions based on Trumphoria. Not even the Fed in its infinite wisdom believes that we are going to hit 3% this year. So funny. At least I got a good laugh out of this.
Mathew Marty said:
I’m in the manufacturing business and have a small sample of customers. All are busy and see 2017 sales up significantly and have placed orders with us reflecting this. The only exception is the oil and gas segment. Oil and gas is still slow but much better than 2016.
I have a hard time seeing the negative in the current environment. I don’t think the Fed raising interest rates hurts. I think it would help investment to be directed to better uses.
Maybe this year I’m just lucky to be sitting in a good spot. That would be OK with me.
Medex Man said:
All discretionary income has been diverted to pay for obama’s fraud
Trump promised to repeal obamacare, not kiss Paul Ryan’s corrupt behind.
The bill to repeal obamacare already passed both houses of congress, there is no excuse. If every single illegal immigrant loses insurance, so what? They can go back to Mexico or where ever they snuck in from.
Trump and Ryan and Pelosi and all the other crooks had better figure out who pays the bills and stop waging war against the US tax base. 30% premium increases are not going to work, socialism doesn’t work. Enough with the bull sh!t.
Obamacare gets repealed, or the US economy goes into depression. Simple as that. And Mr Paul Ryan — we are definitely going to blame you first.
I am sure Ryan is losing a lot of sleep over the fear of the reaction of the people. The “people ” just showed the real people on charge by electing trump, an in your face to Hillary. The thing i feared most would be war in Syria yet here we are less tha 100 days into the new presidency.
The chart of “Retail Trade Hourly Earnings” shows a classic pattern, a right stretched “S”. This also looks like a sinusoid from trough to peak. The pattern is definitely near a peak since concavity is pointing down.
Payless is going to close 400 stores, Sears and Kmart are closing stores and there are so many other stores that are closing.
This can’t be good. Ohh, thanks to Trump, he will create 25 million high paying jobs. Ok, I get it, let’s get rid of the low paying retail jobs first so we can create those 25 million high paying jobs.
It looks like ecommerce companies are hiring a lot of people for warehouse jobs, but at the same time they’re automating a lot of the same jobs. http://www.msn.com/en-us/money/companies/online-retailers-new-warehouses-heat-up-local-job-markets/ar-BBzBtnS?li=BBmkt5R&ocid=spartanntp