Retail Jobs Down In February

March 7, 2014

National Retail Federation president and CEO Matthew Shay and chief economist Jack Kleinhenz issued a response to the organization's February jobs report.

"While there are signs of modest momentum in the economy, now is not the time to play partisan politics with the recovery by forcing federal mandates on retailers and small business owners like an increase in the minimum wage," Shay said.  "Such policy decisions could hamper economic growth and actually drive up the unemployment rate."

NRF calculated retail employment down 6,700 in February, yet up 205,500 year-over-year.  The biggest job losses were seen in electronics and appliance stores, and sporting goods, hobby, book and music stores.  December and January retail employment figures were also revised downward.

"Retailers continued to rearrange and maximize their payrolls and inventories following the holiday shopping season," added Kleinhenz.  "This decline should be temporary in nature and viewed as a speed bump.  We really need to lift the snow screen to adequately measure the economy and jobs situation."

Kleinhenz went on to express optimism for continued ecoomic and employment gains this year and says the NRF is encouraged by growth in construction jobs and building material employment last month, which suggests a forthcoming improvement in residential and nonresidential spending along with household and business confidence.

Shay and Kleinhenz also added that the Bureau of Labor Statistics Employment Situation Summary showed that February total nonfarm payroll employment rose by 175,000 with the unemployment rate at 6.7% and the labor force participation rate at 63%.

Source: Retailing Today

February 2014 Monthly Economic Review: Looking Back, Looking Forward; Stronger Economy Points To Brighter Outlook For Retail

February 6, 2014

2013 was a challenging year for retailers that concluded with one of the most interesting holiday seasons on record.  Looking ahead in 2014, the economic outlook is strengthening and the moderate growth seen during the second half of 2013 should provide greater confidence as we move further into the new year.

NRF expects retail industry sales (which exclude automobiles, gas stations and restaurants) for 2014 to increase 4.1 percent over the previous year - slightly higher than the preliminary 3.7 percent growth the industry garnered in 2013.  Digital channels will also experience solid growth this year, with online sales expected to increase between 9 and 12 percent, the same pace as the preliminary 10.3 percent gain in 2013.*

But before wee look ahead, let's look at 2013.  The economy progressed slowly early in the year but gave way to stronger results in the second half.  Specifically, the overall economy grew a mere 1.1 percent annual rate during the first quarter last year, rising to 4.1 percent in the third quarter and moderating to 3.2 percent in the fourth quarter.  And, job creation, still very much needed in this economic recovery, had an average monthly growth rate of 182,500 last year, seen by many as 'unspectacular.'

The pace of retail sales growth was only 4 percent faster than it was in 2012, based on the three-month moving average, year-over-year.  And though that appears steady, we know that retail spending throughout 2013 was incredibly volatile, falling off in the spring to just 3.2 percent year-over-year average growth.

Consumers started the year faced with higher taxes, surging gasoline prices and federal budget cuts, and while these factors eventually evened themselves out in relation to the impact on consumer spending, interest rate increases in May and June, and the Federal policy impasse in the fall pulled the economy in the opposite direction.  Despite these challenges, consumer spending remained resilient and continues to contribute greatly to the current momentum.

Although early reports for the holiday season came in blurry, American consumers gave the economy a boost in the final months of the year.  It was a tricky holiday season to navigate by retailers and consumer alike; initial concerns about a hangover from October's federal government shutdown, a shortened holiday season calendar and unusually strong winter storms all proved to be quite challenging for companies looking to make the most of consumers limited discretionary budgets.  As early as October, intense promotion and discounting ensued, continuing well into the season. 

Looking ahead to 2014, while the economy looks better for retailers, consumers could be conditioned to expect a continuation of holiday promotions and discounts, putting pressure on many retailers' bottom lines once again.  Some of the fundamental building blocks for the year ahead are:

• Economic growth is expected to be above its long-term historical average.  The baseline estimate for growth in the economy as measured by real GDP is between 2.6 and 3 percent, a noticeable improvement from the estimated 1.9 percent rate for 2013, and the fastest pace in the past three years.
• The labor market is expected to continue its modest recovery, averaging approximately 185,000 jobs per month, helping drop unemployment to near 6.5 percent or lower by the end of 2014.
• Inflation as measured by the CPI is predicted to inch higher to as much as 1.7 percent in 2014.
• The housing sector is expected to continue to improve in 2014, and stronger household and business confidence should spur more consumers spending overall.

While we are cautiously optimistic, we cannon discount the unexpected possibility of a replay of the last two years.  Though government headwinds subsided i part due to the bipartisan budget agreement, there are other issues creating uncertainty.  The expired Emergency Unemployment Compensation, the debt ceiling, and other regulatory uncertainty pose downside risks to the outlook.

Regarding Federal Reserve monetary policy, the data outlined above is consistent with their decision to reduce asset purchases.  However, their challenge is to bring about a normalization of short-term interest rates without creating undue market volatility, letting inflation get out of control and undoing all the positive effects of their multi-year efforts.  Of course, geo-political issues are ever present.  Slower global growth, a tightening of financial conditions or a pop in oil prices are all major risks to the outlook.

Bottom line: given the strong performance of recent economic data and the appearance of a healthier consumer and business outlook, 2014 could finally be the year that the recovery gets traction.  While we are confident in the economy's progress, the pace is not expected to reduce the slack that accumulated during the recent recession.

*NRF forecasted 3.4 percent increase in retail sales for 2013 and online sales to grow between 9.0 and 12.0 percent.  Final 2013 revisions will be available from the U.S. Census on or about April 30, 2014.

Source: National Retail Federation

NRF Unveils 2014 Economic Forecast

February 6, 2014

Retail industry sales (which exclude automobile, gas stations, and restaurants) will increase 4.1% in 2014, up from the preliminary 3.7% growth seen in 2013, according to the National Retail Federation.  The association's 2014 economic forecast calls for online sales to grow between 9% and 12%.

A number of factors contributed to NRF's 2014 economic forecast, including:

• Economic Growth is expected to be above its long-term historical average.  Early estimates for growth in the economy as measured by real GDP could fall between 2.6% and 3%, a noticable improvement from the estimated 1.9% rate for 2013, and the fastest pace in the past three years.
• The labor market is expected to continue its modest recovery averaging approximately 185,000 jobs per month, helping decrease unemployment to near 6.5% or lower by the end of 2014.
• Inflation as measured by the CPI is predicted to inch higher to as much as 1.7% in 2014.
• The housing sector is expected to continue to improve in 2014, and stronger household and business confidence should spur more consumer spending overall.

"The economy remains susceptible to buffets as we are already witnessing in the new year, thanks to harsh winter weather, domestic and global financial issues," said NRF chief economist Jack Kleinhenz.  "While we are careful not to ignore the challenges, we are optimistic and hopeful that future disruptions will be limited, allowing employment and business investment to grow all the while giving retailers and their customers the confidence in the economy they need."

Source: Retailing Today