Labor Dept.: Job Loss Due to Weak Retailing

WASHINGTON – A sharp drop in U.S. payrolls outside the farm sector in December partly reflects unexpected weakness in the key holiday retail season, a U.S. Labor Department economist said Friday.

"It wasn't a big retail season (last) year," Tom Nardone, chief of the Division of Labor Force Statistics, told Reuters.

Within the retail category, he said there was a big drop in hiring at restaurants and bars, a continuation of a downward trend. He also said hiring in the miscellaneous retail category, which includes toy stores, book stores and catalogue sales, was lower than the seasonal expectation.

Labor said the economy lost 101,000 jobs in December -- defying expectations companies would add workers. The decline was led by a 104,000 fall in retail sector jobs, the largest drop in that category since December 2001.

Despite the slide in payroll employment, the unemployment rate stayed steady last month at 6 percent.

Wal-Mart Stores Inc. and other U.S. retailers on Thursday posted holiday sales that were largely in line with lowered forecasts, as the biggest shopping month of the year proved disappointing and heightened worries about waning profit potential.

Analysts expect more warnings in the next few weeks after a dismal holiday shopping season that is likely to show the smallest sales gain in more than 30 years. Most retailers operate on a fiscal year that ends in January to cover the holiday period and the big shopping days after Christmas.

The other key negative factor in Friday's report was the 65,000 decline in manufacturing employment, Nardone said.

One bright spot in the report, the economist said, was the slight impact from a bout of cold weather on employment in recreation, amusement and lodging. A cold snap before Christmas likely led to early openings of some ski resorts, he said.

He also pointed out that although the downturn in employment continued in 2002, the picture was not as bad as the previous year.

The economy entered recession in 2001 and shed 1.4 million jobs compared to a decline of 181,000 last year.