The increase in holiday hiring this year is a sign that retailers are becoming more confident in the economy after years of softer sales in the wake of the 2008 financial crisis.
The growth comes as some retailers get more bullish on the economy in the months leading up to the holidays, despite shaky manufacturing and jobs figures and as improving consumer confidence is expected to propel holiday sales to the highest levels since before the Great Recession.
“More hiring mangers are expecting a better season and fewer are expecting a decrease, which points to an increase in confidence,” said Courtney Moyer, a public relations manager at leading hourly employment network Snagajob.
A survey released this week by Snagajob forecasts that 2012 holiday hiring will reach the highest level in at least five years, with 63% of managers planning to make hires this year compared with just 51% last year. That equates to about 6.1 seasonal workers on average per hiring manager, which is up both year-over-year and from a low of just 3.1 in 2009.
The stronger levels reflects optimism by retailers that sales will be higher this season, a sign of improving consumer confidence and increased discretionary spending.
"A lot of hiring managers are expecting better sales increases this year," Moyer said. "It makes sense you’d want to increase staff.”"
Retail industry group the National Retail Federation forecasts sales this year will grow 4.1% to $586.1 billion, higher than both the average 10-year holiday sales increase of 3.5% and above the $462 billion of holiday sales recorded in 2011.
Further, of the nearly 2,000 managers responsible for hiring hourly, seasonal employees surveyed by Snagajob, 32% are anticipating an increase in sales this year compared with just 25% in 2011, while just 12% are forecasting a decrease.
Meanwhile, complimenting an expected rise in online sales again this year, ShopperTrak forecasts foot traffic in retail stores this season will be up to the tune of 2.8% this November and December.
The additional staff helps gives retailers the flexibility to better manage an influx in demand and store traffic if holiday shopping grows as expected. If retailers are in a position to capitalize on opportunities that arise during the key period, they will be able to maintain a competitive edge, and customer service is one of the many things retailers use to push ahead of rivals.
“There’s nothing worse than losing sales when [the customer] is in a store because you don’t have the right force on the sales floor,” said National Retail Federation CEO Matt Shay.
Indeed, Wal-Mart, which upped holiday hiring slightly this year from 2011, said one reason why the world’s biggest retailer is hiring so many additional employees is to ensure customers are getting “excellent service” during its busiest time of the year.
“There are certainly going to be retailers who are slightly more bullish based on what they see as they’re own competitive advantage,” Shay said.
Of course, the bullish attitude is on a case-by-case basis and the NRF forecasts holiday hires will be between 585,000 to 625,000 this year, which is in line with 2011’s 607,500 workers.
Target (TGT) has been a bit more bearish on its hiring levels and said it plans to hire just 80,000 to 90,000 people this year, down from the 92,000 it added last year as it enters the season cautiously.
It’s not surprising some would be more careful with holiday hiring as recent economic figures point to a still-slow economic recovery. The U.S. added just 96,000 new nonfarm jobs in August, according to the U.S. Labor Department, far below the 125,000 forecasted by economists. And with investors awaiting September’s jobs numbers, set to be released this Friday, economists expect job creation remained lackluster.
Perhaps even more worrisome is that the Bureau of Economic Analysis last week revised lower second-quarter GDP to 1.3% from 1.7% amid softening manufacturing numbers. The Census Bureau also said new orders for longer-lasting durable manufactured goods plunged 13.2% in August from a 3.3% increase in July.
At the same time, consumer confidence jumped to the highest level in seven months in September from a low in August, according to the Conference Board’s consumer confidence index, as consumers grew more upbeat on the longer term.
In another sign of confidence, retailers are expected to start and finish hiring even earlier than in previous years. Instead of waiting to November when retailers have a better idea of how the holiday shopping season will play out, about 57% of hiring managers say they will compete their hiring by the end of October, if not sooner, compared with just 46% last year, according to Snagajob.
And more of these temporary retail gigs this season are expected to turn into full-time positions, which means two things: either managers will be impressed with their workers and want to keep them on board or retailers will need the extra staff under the belief strong sales will continue through at least early 2013. Target in 2010 hired about 40% of its seasonal workers for full-time year-round positions.
“If they keep the jobs, it’s a good indication maybe people are beginning to spend more in retail,” Moyer said.
The confidence by retailers in the economy is a positive sign, as consumer spending represents nearly 70% of all U.S. economic activity. An increase in holiday sales points to upbeat retail trends that can ultimately help drive economic growth.
“Hiring is absolutely critical for the overall health of our broader economy,” Shay said.