Strong Durable-Goods Sales Lift Job Growth in Retailing

MARKET WATCH

SEARS, Roebuck & Co., the ``store where America shops,'' is hardly alone in wooing last-minute Christmas shoppers: Cash registers are jingling at the Chicago-based retailer and at scores of other American establishments from Miami to Seattle.

But apparel and other relatively low-priced items aren't the only products moving through checkout stands. Big-ticket items - what economists call ``durable goods,'' such as appliances and television sets - are also being loaded onto delivery vans in healthy numbers.

``Dishwashers and refrigerators are selling at unbelievable levels this year,'' says Robert McHenry, a Sears spokesman. ``Appliance sales are doing better than ever, registering growth in double-digit levels.''

Because of strong sales, Sears has added 35,000 seasonal workers to its regular work force of 255,000 ``associates.'' ``We're not planning any major layoffs'' next year, Mr. McHenry adds.

The turnover in durable goods is ensuring steady job growth among retailers and manufacturers. In November, the United States unemployment rate dipped to 5.6 percent - the lowest jobless rate since August 1990 and down from 5.8 percent in October.

Sales of these goods is helping shore up expectations for a strong year overall in retailing. Building-supply and hardware-store sales rose 3 percent in November from October, the US Commerce Department reports. Furniture sales are also brisk.

``Wall Street may not be looking so good - in terms of concerns about the strong economy and rising interest rates - but `Main Street' is looking very good,'' says Karen Grimes, equity-research director at Wilmington Trust Company, Wilmington, Del.

While overall holiday sales are not as robust as some analysts projected - they are now running about 5 percent to 6 percent higher than last year, compared with the 7 percent some anticipated - they do remain solid, she explains.

``Consumer durables have done extremely well this year,'' says Cynthia Latta, an economist with DRI/McGraw Hill, an economic-consulting firm in Lexington, Mass.

Based on data through October, furniture/appliance sales are up more than 13 percent from last year; radio/television/sound equipment is up more than 21 percent; toys and sportswear have risen about 10 percent; and even smaller items, such as curtains and rugs, are doing better this year, Ms. Latta notes.

But will consumers carry their taste for durables into 1995? The issue is crucial not just to manufacturing and retail workers but to the economic climate of a number of states dependent on durable-goods manufacturing. States manufacturing these goods are believed to be especially sensitive to increases in interest rates.

The Great Lakes region, for example, leads the nation in its dependence in earnings on durable-goods manufacturing, followed by New England. The economies of Michigan, Indiana, Ohio, and Wisconsin have been ``doing very well because durable goods are doing very well,'' says Morton Marcus, an economist at Indiana University, in Bloomington. Nationally, $1 of every $9 earned in the US comes from durable-goods manufacturing, Professor Marcus says.

This week's decision by the US Federal Reserve Board not to seek another interest-rate hike will not change anything for durable-goods companies, Marcus says. He suspects the economy may already be slowing slightly.

Still, based on rate hikes this year, there will clearly be a ``slowing of the US economy'' in 1995, Latta says. But since the fourth quarter has been so brisk, consumers will not begin to feel it until mid-year. That means that, while there will not ``be significant further growth'' for consumer-related firms, including manufacturers of durable goods, there probably will not be ``any major job losses'' for those companies, she says.

DRI-McGraw Hill does not anticipate a recession next year. Instead, it expects the jobless rate to come down to about 5.5 percent.

Still, some mutual-fund portfolio managers are already reportedly selling off durable-goods stocks in expectation of a slower economy next year.

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