Job-Cut Announcements Remain Flat in May
EMPLOYERS ANNOUNCE 38,180 CUTS AS SUMMER SLOWDOWN APPROACHES
CHICAGO, June 2, 2010 - The pace of downsizing was virtually unchanged in May, as employers announced plans to cut 38,810 jobs from their payrolls during the month. That was slightly (1.3 percent) more than the four-year low of 38,326 job cuts announced in April, according to the latest job-cut report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
May layoffs were 65 percent lower than the same month a year ago, when planned job cuts totaled 111,182. This marks the 12th consecutive month in which the job-cut total was lower than the comparable year-ago figure. It also marks the 12th consecutive month that saw fewer than 100,000 announced job cuts.
Through the first five months of 2010, planned layoffs announced by employers totaled 258,319, which is 69 percent fewer than the 822,282 announced during the same period last year.
"Announced job cuts have, for all intents and purposes, returned to pre-recession levels. What makes the low job-cut totals we have seen this spring particularly remarkable is that we still have not reached what is the slowest downsizing period of the year, which typically occurs during the summer months," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc.
"It is difficult to imagine the pace of downsizing slowing even further, considering that the economy, while recovering, is still in a relatively fragile state. However, monthly job cuts may indeed continue to fall during the summer, when many businesses hold off on making dramatic staffing changes," he added.
The one area of the economy that may not follow the typical pattern of a summer slowdown is the government and non-profit sector, which announced 16,697 job cuts in May, 12 percent more than April's 14,973. May job cuts brought the year-to-date total for the struggling sector to 93,470, which is more than two-and-a-half times more than the second-ranked pharmaceutical industry's 34,157 job cuts this year.
"Unlike the private sector, which is beginning to see the fruits of recovery, the budget crisis for many states and municipalities is only getting worse. High unemployment and falling home ownership are taking a significant toll on tax revenues. And, with many states in an election year, politicians are reluctant to raise income taxes and sales taxes, so as not to punish voters. However, this leaves them with no other choice but to make drastic cuts in public programs and the jobs that go with them," said Challenger.