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January’s blockbuster jobs report shocked Wall Street and overturned expectations of a cooling labor market. However, the headline numbers alone do not tell the whole picture of the U.S. economy.
While it is true that the labor market grew much faster than expected last month, one important indicator, average working hours, has declined, and this trend could indicate a change in employment trends. Economists say this trend could be concerning.
“Companies that hire or retain employees are reducing their working hours. Working hours are falling in a manner often seen around the time of economic downturns,” says the Business Cycle Research Institute. Co-founder Lakshman Achusan told Yahoo Finance Live.
A perfect example is retail. The challenging situation in this sector amid changing consumer purchasing habits is forcing companies to make difficult choices. According to the U.S. Bureau of Labor Statistics, the average number of hours worked per week in January was 29.1 hours, down from 30.2 hours a year ago.
Some of the industry’s largest companies have announced job cuts, including Macy’s (M), Wayfair (W), Levi Strauss (LEVI), and REI.
Levi Strauss CFO Harmit Singh told Yahoo Finance Live that the company is hiring up to 15% of its workforce to “pivot” to a direct-to-consumer first model and develop a “leaner, more agile operating structure.” He said he would lay off employees.
Retailers have cut more than 5,300 jobs so far this year, according to a report from global outplacement firm Challenger, Gray & Christmas. The sector had the third highest number of job cuts announced in January, after financial services and high technology.
And those in leadership positions are no exception. The number of retail CEO turnover in 2023 is more than double that of the previous year, with more than 50 people leaving the company.
Kathryn Leppard, head of global retail operations at Heidrick & Struggles, warned of “a lot of customer churn” ahead as more retailers look to “right the ship.”
Increased layoffs and higher executive turnover in the retail industry are unlikely to cause economy-wide layoffs or an economic downturn, but they do highlight a noteworthy trend. The challenges extend far beyond the retail industry, with unprecedented disruption from e-commerce and technology widening the gap between winners and losers.
“The question is how the economy will change, and how rapidly it will change in a digital world,” Morningstar’s David Swartz explained. “Because of the pandemic, the economy is in a tougher place than ever…and no one has a magic solution to the problem.”
sheena smith Anchor of Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Have a tip about a deal, merger, activist situation, or more? Email seanasmith@yahooinc.com.
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