July Sees Third Consecutive Increase in Job Cuts
PLANNED LAYOFFS UP 6% TO 41,676;
STILL WELL BELOW 2009 PACE
CHICAGO, August 4, 2010 - Employers announced plans to shed 41,676 workers in July, a six-percent increase from the 39,358 layoffs in June. While July marks the third consecutive monthly gain in announced job cuts, downsizing activity remains at its lowest level since before the 2001 recession, according to global outplacement consultancy Challenger, Gray & Christmas, Inc., which released its latest report on planned job cuts Wednesday.
Job cuts have increased every month since falling to a four-year low of 38,326 last April. The increases have been small, however, averaging less than 3.0 percent each month. The total increase between April and last month's 41,676 measures just 8.7 percent.
Job cuts remain well off the pace of 2009. The July total is 57 percent lower than the 97,373 job cuts announced the same month a year ago. Overall, the 339,353 job cuts announced so far this year is 64 percent fewer than the 944,048 planned layoffs recorded in the first seven months of 2009.
"It is true that job cuts have increased in each of the past three months. However, the increases are so slight and the monthly totals so low when compared to recent years, that the trend in no way suggests a reversal of the significant slowdown in job-cut activity witnessed over the past year," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
"This is not to say that job cuts won't experience more substantial increases in the months to come. In fact, seasonal trends indicate that monthly job cuts tend to get heavier late in the third quarter through the end of the year, as employers make last-minute adjustments to their payrolls to meet annual earnings goals," he added.
One area that continues to struggle is the government and non-profit sector. For the fourth time this year, it was the biggest job-cutting sector of the month, announcing plans to eliminate 7,193 workers in July. That was 36 percent higher than the 5,306 government/non-profit job cuts in June, but 52 percent lower than the 15,138 averaged per month this year.
So far this year, the government and non-profit sector has announced 105,969 job cuts, nearly triple the next largest job-cutting sector: the pharmaceutical industry, which has announced 37,010 job cuts, 30 percent fewer than at this point last year.
"Government sector job cuts have slowed, but the situation for these employers has not improved much, particularly for state and local governments that continue to suffer from massive budget shortfalls. This sector has the biggest potential for additional job-cut spikes between now and the end of the year. Unless the states and municipalities can figure out a way to replace the money being lost from lower income, payroll and property tax revenue, then more job cuts will probably be necessary," warned Challenger.