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