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February 28, 2009

Retail Trade and Seasonal Fluctations in Employment

One challenge in tracking changes in employment in the economy is that employment in many industries follows a seasonal pattern. Certain sectors like retail trade tend to add employment during the holiday shopping season and then cut back employment in the new year.

This is a problem because it is useful to know if employment from month to month is growing or contracting, and knowing that requires separating out seasonal changes in employment from underlying growth.

Below is a figure presenting the growth of employment in retail trade from September to December each year. On average since 1991 Pennsylvania employers in retail trade have added just under 40,000 jobs from September to December each year. However as the holiday shopping season ends employment in retail trade falls by a little less than 37,000 jobs. As you can also see in the figure for the first time since 1990 there was a sharp slowing of hiring during the holidays with employers adding just 18,700 jobs.
RetailTrade (480 x 332).gif
(see a larger figure)

Word from the good people at the Center for Workforce Information and Analysis in the Pennsylvania Department of Labor and Industry is that this unusual pattern from September to December also translated into fewer layoffs in January. And this outcome confused the algorithm used to seasonally adjust January's employment totals. Retail trade in January on a seasonally adjusted basis added 4,500 jobs. Absent this gain PA would have shed more jobs in January.

We will have to wait to see the actual data until Monday.

Posted by Price at February 28, 2009 01:00 PM


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