Kronos released the newest Retail Labor Index data today. Following is a summary analysis from Dr. Robert Yerex, Chief Economist at Kronos.
The Kronos Retail Labor Index was up slightly for the month of July, to a level of 3.63. This means that out of 10,000 applicants, 363 are being hired. Both hirings and applications were down (seasonally adjusted) from June, with application rates continuing to show significant volatility, even after being seasonally adjusted.
Much of this is likely due to great uncertainty in the job market. Those that are unemployed often seek new work diligently for several months and then become frustrated and stop looking. Good news as to economic prospects will often bring these individuals back into the search for new positions. Meanwhile, when economic news is negative, those with jobs are less likely to seek other work. This has been reflected in the retention rate which has been positive for the last 24 months. When the retention rate is positive, it means that employees are more likely to stay on the job than they were the previous year.
Consumer spending remains well off the levels seen in mid-2008, and seems unlikely to return within the next several years. There are four important drivers for increasing consumer spending: withdrawals from savings; increases in real disposable income; realization of real capital gains on assets that are sold; and use of credit, primarily revolving consumer credit in the form of credit cards and lines of credit. Currently, the trends in all four of these are moving against increased spending: the savings rate is increasing; real disposable income has not shown a measurable increase in the past few years; asset values continue to decline; and total outstanding revolving consumer credit is at its lowest level since March 2006 and will likely continue to drop, possibly to levels not seen since the 1990s.
An additional important factor is consumer confidence, which also remains low. With all these factors dampening consumer spending and consumption, retailers are unlikely to increase hiring rates anytime soon.