Firm forecasts conservative holiday hiring at retail

Chicago Better-than-expected back-to-school sales results may lift the spirits of many retailers who were probably anticipating a bleak holiday season. But it may not necessarily lead to increased seasonal hiring by cautious retailers, according to annual holiday hiring forecast released Wednesday by global outplacement consultancy Challenger, Gray & Christmas.

“Holiday hiring might improve slightly over last year, but only because 2008 saw the lowest seasonal employment growth in nearly 20 years. With millions of Americans out of work and many more simply cutting back on all discretionary spending, few retailers will take the risk of eating into slim profits with extra workers,” said John A. Challenger, CEO, Challenger, Gray & Christmas.

Last year, retail employment grew by just 384,300 from October through December, according to non-seasonally adjusted data from the Bureau of Labor Statistics. That was nearly 50% fewer than in 2007, when retailers added 720,800 workers during the holiday months.

The 384,300 seasonal workers hired in 2008 represent the lowest holiday hiring figure since 1989, when retailers added just 380,500 workers.

While there have been some signs that the recession may be over, conditions have remained dismal for retailers. As a result, employers in the sector have announced 89,242 job cuts through August, an 82% surge from the 48,971 retail job cuts recorded in the first eight months of 2008.

“However, there are some signs of hope,” Challenger said. “After heavy downsizing in the first quarter, job cuts in the retail sector slowed significantly in the second quarter and are on track to be even lower in the third quarter. Additionally, the latest data on retail sales were better than expected.”

The latest report from the Commerce Department shows that retail sales increased by 2.7% in August, after falling 0.2% in July. It was the biggest gain in three years.  Much of the sales increase was due to robust car sales ignited by the government’s cash-for-clunkers program. However, other retail categories saw improvement, including apparel, up 2.4%; sporting goods, up 2.3%; and general merchandise, up 1.6%.

“The stronger sales figures heading into the holidays could boost seasonal hiring above last year’s meager activity,” Challenger said. “But the hiring surge may come later than normal this year, as many retailers wait to see how holiday sales are going before adding extra workers.”

The good news for retailers is that if there is a need for late hiring, the labor pool is flush with qualified candidates who undoubtedly would be eager to earn some extra holiday spending money and take advantage of employee discounts, according to Challenger.