Retailers cut 21,000 jobs in June

Retail job cuts moderated in June, when U.S. merchants trimmed 21,000 as they kept shuttering stores, but weakness in the overall job market looms over retailers, who need consumers to spend more freely.

June was the 17th straight month that retailers cut jobs, but they trimmed much less than their 12-month industry average of 50,000, according to Sophia Koropeckyj, managing director of Moody's Economy.com, a division of Moody's Analytics.

Retail, among the sectors most sensitive to the consumer spending slowdown, was one of the first to slash jobs, accounting for as much as 25 percent of all jobs lost at the worst point late last year. But that share has been declining.

Retailers employ about 11.2 percent of all American workers. Year-to-date, retail job losses accounted for about 7 percent of the overall jobs lost.

But Koropeckyj said the industry is "not out of the woods because the employment situation is deteriorating." Employees in all industries are working fewer hours or have had to take pay cuts, she noted, and those trends could have big implications for stores, which need shoppers to open their wallets.

Employers overall cut a larger-than-projected 467,000 jobs in June, pushing the unemployment rate up to a 26-year high of 9.5 percent, indicating that an economic recovery will be rocky.

Koropeckyj expects employers to keep slashing jobs through at least mid 2010, and she predicts the jobless rate will exceed 10 percent by early next year.

June's overall payroll reduction was higher than the 363,000 drop economists expected, but the rise in unemployment - from 9.4 percent in May - wasn't as sharp as the expected.

In the retailing sector, motor vehicle and parts dealers shed the most jobs, losing 10,500. Auto dealers cut 8,900, while building material and garden supply stores shed 4,100, furniture and home furnishings stores lost 2,100; and clothing and accessories stores lost 2,300.

Among the positive signs Koropeckyj sees is that some retail sectors added significant numbers of jobs. Food and beverage stores added 1,500, while health and personal-care retailers added 1,200.