Job-Cut Announcements Remain Flat
Employers announce 39,358 cuts IN JUNE
CHICAGO, July 1, 2010 - Employers announced plans to cut 39,358 jobs from their payrolls in June, a slight (1.4 percent) increase from the previous month's 38,810 announced layoffs. This marks the third consecutive month in which announced job cuts totaled less than 40,000, according to the latest job-cuts report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
Heading into the second half of 2010, the pace of downsizing has slowed significantly from a year ago. The job-cut total for each month this year, including June, was lower than the same month in 2009. June job cuts were 47 percent lower than the 74,393 announced a year ago.
Overall, employers announced 297,677 job cuts in the first six months of 2010. That is 67 percent below the 896,675 layoffs in the first half of 2009 and the lowest six-month total since 2000, when the mid-year total was 223,421.
Job-cut activity, which was relatively slow in the first quarter, declined even further in the second quarter. Planned job cuts announced from April through June totaled 116,494, a 36 percent drop from the 181,183 planned cuts reported in the first three months of the year. The second-quarter was 63 percent lower than the same period a year ago, when employers announced 318,165 layoffs.
"While some may question the sustainability of this recovery, the dramatic decline in planned layoffs over the past six months certainly suggests that the nation's employers are not anticipating a double-dip recession. With the exception of organizations in the government and non-profit sector, employers are looking six months ahead and apparently do not see a reason to make additional reductions in payrolls," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
The government and non-profit sector has continued to struggle even as other areas of the economy begin to recover. It is the leading job-cut sector so far this year with 98,776 announced layoffs, including 5,306 in June. Since January 2008, employers in this sector have announced a total of 346,674 job cuts.
While the government/non-profit sector has been the top job-cutting industry in the three months prior to June, job cuts last month were topped by the computer industry. The 9,085 job cuts announced by computer firms in June represent the highest monthly total for the sector since May 2009 (15,384).
Even with the June surge, the computer sector has announced just 16,964 job cuts this year, 67 percent fewer than the 51,461 announced in the first six months of 2009. In terms of year-to-date job cuts, the computer sector ranks fourth behind government, pharmaceutical (34,987), and retail (26,181).
"Job cuts this year have declined for each of the top-five job-cutting industries. Even cuts in the government and non-profit sector are down, albeit not as dramatically as the other leading job-cut sectors. This certainly bodes well for the job market as we enter the second half of 2010," said Challenger.
"Those who have jobs can feel more secure and those who are looking may start to see some success. We already have seen some job creation this year, with payrolls growing by 982,000 jobs between January and May, according to government data. However, it is important to remember that job creation in the nascent stages of the recovery can fluctuate heavily from month to month," he noted.
"But, looking ahead, most employers are growing more and more confident and this will inevitably lead to increased hiring," he added.
The latest survey among chief executive officers of the nation's largest employers provides further evidence of the job market's growing strength. The latest survey, which is conducted quarterly by the Business Roundtable, found that in the second quarter, 79 percent of CEOs expect to enjoy increased sales over the next six months. Forty-three percent expect capital spending to increase and 39 percent anticipate increased hiring in the next six months.
Those figures represent a vast improvement from the same quarter a year ago, when just 34 percent of CEOs expected sales to grow; 12 percent expected increased capital spending; and only six percent foresaw employment gains.
"Unfortunately, even as business confidence continues to grow, hiring will never occur as quickly as most people would like. We have seen nearly one million Americans added to payrolls in the last six months, but that barely makes a dent in the more than eight million who joined the ranks of the unemployed during the recession," said Challenger.
"Hiring will accelerate in the coming months, but not before employers maximize the productivity of their existing workers by adding new technology and increasing hours. In the meantime, the job market will remain fiercely competitive as the recently unemployed square off against the long-term unemployed as well as with job seekers re-entering the labor pool after abandoning it out of frustration. These unemployed job seekers will also be competing with people who are currently working in part-time jobs or jobs they don't like and now feel more confident about seeking greener pastures," said Challenger.
"Now is not the time for a passive job-search strategy that relies primarily on answering internet help-wanted advertisements. In this environment, job seekers must be aggressive. This means expanding one's network, meeting with people face-to-face everyday, cold-calling companies that are not advertising job openings and being creative when it comes to selling yourself," Challenger advised.
"As the second half of the year gets underway, job seekers should view it as a new beginning; a chance to regroup and renew their resolve. For those who have been out of work for a prolonged period - a year or more - it is particularly important to remain vigilant in the job search.
"It may be time to consider relocation or switching industries. The long-term unemployed may be forced to take a position he or she doesn't want or that doesn't meet salary expectations. However, it is critical for these people to get back into the workforce in order to make themselves more marketable going forward," he concluded.