While all the buzz around artificial intelligence has people wondering when the robots are going to take their jobs, the Labor Department’s latest employment report suggests that is more of a theoretical concern — at least for now.
April nonfarm payrolls rose by a seasonally adjusted 253,000 compared with March, surprising economists, who on average projected much lesser gains of 179,000, according to FactSet. The unemployment rate also proved stronger than expected, falling to 3.4 percent from 3.5 percent in March, where economists projected an uptick.
Department stores added 600 jobs to employ 959,800, while apparel and accessories specialty stores cut payrolls by 2,900 to 1.1 million. Those figures, however, reflect employment within the four walls of the store and don’t count headquarters staff or people who work in the faster growing e-commerce businesses many retailers have developed.
The strong jobs report is a good news/bad news situation for Wall Street, but investors choose to see the glass as half full after the employment figures, guessing that people with jobs will continue to spend. The Dow Jones Industrial Average was up 1.4 percent, or 474.12 points, to 33,601.86 in midday trading on Friday.
Among the fashion industry gainers were American Eagle Outfitters Inc., 5.3 percent to $13.22; Farfetch, 5.3 percent to $4.17; Nordstrom Inc., 5 percent to $14.83; Gap Inc., 5 percent to $8.70; G-III Apparel Group, 3.9 percent to $15.32; Canada Goose Holdings Inc., 3.7 percent to $19.87; VF Corp., 3.7 percent to $21.75, and Macy’s Inc., 3.3 percent to $15.24.
The trouble with the report is that the Federal Reserve is trying to fight inflation and bring the economy in for a soft landing by raising interest rates with an eye toward cooling off the labor market.
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A weaker job market with lower inflation would be more sustainable in the long run.
Year-over-year consumer prices have been rising by at least 5 percent since June 2021, well ahead of the Fed’s 2 percent target.
“Price stability is the responsibility of the Federal Reserve,” said Jerome Powell, chair of the central bank, at a press conference on Wednesday. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”
The Fed raised its benchmark interest rate by another 0.25 percent — making for an epic 5 percent hike in just over a year. And while Powell and his colleagues signaled a pause in rate increases was in order, the labor market is proving to be especially resilient.
If the job market doesn’t cool enough to help tamp down inflation, more rate hikes could be coming, making a soft landing for the economy harder and harder to pull off.
For retailers, who despite the job market are already dealing with skittish consumers, renewed worries over a potential recession count as storm clouds on the horizon.