PLANNED JOB CUTS DROP TO 10-YEAR LOW OF 34,768
CHICAGO, September 1, 2010 - While the pace of job creation continues to disappoint, job security appears to be stronger than ever. The latest report on downsizing activity reveals that planned job cuts announced by employers in August fell to 34,768, the lowest monthly total in over a decade.
August job cuts were down 17 percent from the 41,676 cuts announced in July, according to the report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. This marks the first decline following three consecutive months of increases. August not only replaces April as the lowest job-cut month of the year, it represents the lowest job-cut month since June 2000, when employers announced only 17,241 planned layoffs.
Job cuts last month were 55 percent below the 76,456 planned cuts announced in August 2009. So far in 2010, monthly totals are, on average, 62 percent lower than the year-ago figure. Overall, the 374,121 job cuts through August are down 65 percent from the 1,070,504 layoffs announced by this point in 2009.
"Every other job-market indicator seems to be stuck in first gear. In contrast, the layoff picture has improved so significantly that we are at pre-dot.com-collapse levels when it comes to monthly job-cut announcements. There have been 15 consecutive months in which job cuts have not exceeded 100,000. Job cuts have not exceeded 50,000 since March," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
"To put this in perspective, job cuts never fell to these levels following the 2001 recession; not even when the economy was reaping the rewards of the housing boom. You have to go all the way back to the expansion of the late 1990s and early 2000 to find a similar pace of downsizing," said Challenger.
The 2010 job-cut total would be even smaller were it not for ongoing struggles in the government and non-profit sector, which has announced 112,378 job cuts to date. That is 30 percent of all job cuts and about three times more than the next closest job-cutting industry (pharmaceutical: 37,265). The good news is that job cuts by government and non-profit employers appear to be on the decline. Since June, job cuts have averaged 6,003 per month, compared to an average of 27,425 cuts per month between March and May.
The industrial goods sector was the largest job-cutting sector in August, announcing 6,236 planned layoffs. That was the largest monthly job-cut total for the sector this year. However, the impact of the increase is muted by the fact that the year-to-date total of 16,962 is lower than the 17,528 job cuts employers in this sector announced last December. By this point in 2009, industrial goods companies had announced 101,591 job cuts.
"If there is a double-dip recession on the horizon, either companies do not see it or they have no slack in their existing workforces. The recovery may indeed be stalling, but any slowdown is unlikely to lead to a sudden resurgence in mass layoffs. Unfortunately, a slowing recovery could be met with further delays in much-needed hiring," said Challenger.
"Private sector hiring has seen seven consecutive months of net gains, according to the Bureau of Labor Statistics. But the gains have been too small to make a noticeable dent in overall unemployment. Even when hiring accelerates to the point where payrolls are growing by 300,000 to 400,000 new jobs per month, it will take a significant amount of time to reabsorb the more than eight million Americans who joined the ranks of the unemployed during the recession," said Challenger.
"In many respects, we are coming out of this recession faster than in the previous recession, which saw a jobless recovery period that lasted nearly two years. In contrast, payrolls turned positive and unemployment began falling just six months into this recovery, which some economists estimate began in July 2009. This progress, however, is overshadowed by the fact that the recovery was starting from a hole that was much deeper than any other recent recession. We obviously have a long way to go before this job market looks and feels like a recovery," he concluded.