December Hiring Surge Lifts Holiday Hiring To 14-year High

Published January 14, 2014 

Despite tepid sales gains and lower store traffic this holiday season, retail employment grew by a better-than-expected 801,100 jobs over the final three months of the year, making it the strongest holiday hiring period since 1999, according to an analysis of government employment data by global outplacement consultancy Challenger, Gray & Christmas, Inc.

Overall, the three-month hiring total was up 6.6 percent from the previous year, when retail employment expanded by 751,800 from October through December. The increase was due primarily to strong hiring in October and December. November employment gains were actually down 6 percent from a year earlier.

Retailers added 176,500 workers in December, which is a 63 percent increase from the 108,000 workers hired in December 2012. It was the largest December employment gain for the retail sector since 2005, when these employers added 196,600 in the final month of the year.

“Heading into the holiday season, we anticipated hiring to be flat or come in lower than the previous year. There were many factors contributing to this view, including the fact that consumer confidence was shaken by the recent government shutdown, wages for the majority of Americans remain flat, and millions remain unemployed or underemployed as the economy struggles to recover,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“Moreover, forecasts from leading retail analysts were less than optimistic. Retail research firm ShopperTrak predicted in September that sales at U.S. stores would climb just 2.4 percent in November and December. It also estimated that store visits would fall 1.4 percent during those months. Meanwhile, an outlook released by the National Retail Federation last October expected holiday sales to ‘marginally increase’ 3.9 percent, compared to the 3.5 percent increase recorded in 2012,” said Challenger.

Surprisingly, while forecasts for marginal sales gains and fewer shoppers proved to be accurate, these trends did not appear to slow down hiring activity. Last week, ShopperTrak reported that holiday season sales increased 2.7 percent while in-store traffic decreased nearly 15 percent.

Meanwhile, post-holiday workforce adjustments may prove painful. Retailers that struggled over the holidays may not only let go of the seasonal workers they hired, but they may include some permanent full-time workers. Macy’s recently announced it would lay off 2,500 workers, close stores, and leave some open positions unfilled. The decision comes after the major retailer revised their second-half same-same store sales estimate for 2013 to 2.8 or 2.9 percent increase in sales, not the 4 percent previously expected.

“If other retailers’ sales numbers do not meet expectations, we may see similar staffing decisions elsewhere. Macy’s hired 83,000 workers for the holidays, and Walmart and Target announced comparable hiring figures. Although hiring was better than expected, those employers may adjust staffing back to previous levels, or worse, cut even deeper to eliminate costs,” said Challenger.

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The widely-reported seasonally-adjusted data, which is intended to “smooth out” volatile fluctuations in seasonal hiring, showed a net gain of 22,300 new retail jobs in November. Challenger uses the non-seasonally adjusted data to capture the actual holiday hiring activity.

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