by Calculated Risk on 11/02/2014 11:17:00 AM

Every year I track seasonal retail hiring for hints about holiday retail sales.

At the bottom of this post is a graph showing the correlation between October seasonal hiring and holiday retail sales.

First, here is the NRF forecast for this year: Optimism Shines as National Retail Federation Forecasts Holiday Sales to Increase 4.1

[T]he National Retail Federation ... expects sales in November and December (excluding autos, gas and restaurant sales) to increase a healthy 4.1 percent to $616.9 billion, higher than 2013’s actual 3.1 percent increase during that same time frame.

According to NRF, retailers are expected to hire between 725,000 and 800,000 seasonal workers this holiday season, potentially more than they actually hired during the 2013 holiday season (768,000). Seasonal employment in 2013 increased 14 percent over the previous holiday season.

Note: NRF defines retail sales as including discounters, department stores, grocery stores, and specialty stores, and exclude sales at automotive dealers, gas stations, and restaurants.

Here is a graph of retail hiring for previous years based on the BLS employment report:

Click on graph for larger image.

This graph shows the historical net retail jobs added for October, November and December by year.

Retailers hired about 786 thousand seasonal workers last year (using BLS data, Not Seasonally Adjusted), and 160 thousand seasonal workers last October.

The following scatter graph is for the years 1993 through 2013 and compares October retail hiring with the real increase (inflation adjusted) for retail sales (Q4 over previous Q4).

In general October hiring is a pretty good indicator of seasonal sales. R-square is 0.70 for this small sample. Note: This uses retail sales in Q4, and excludes autos, gasoline and restaurants.  Note: The NRF is just looking at November and December.

When the October employment report is released this coming Friday, I'll be looking at seasonal retail hiring for hints if retailers expect a strong holiday season.