Jobs Outlook Darkens As Financial Crisis Grows
Employment consulting firm Challenger, Gray & Christmas said planned corporate layoffs rose to 95,094 in September, up 33 percent from the year-ago period, increasing the likelihood that overall layoffs will top the million mark for the first time since 2005.
Bill Warren, executive Director of the non-profit JobCentral.com, has seen a dramatic slowdown in hiring “almost across the board” since August. “Companies are looking to fill only those post critical to their operations today.”
“They're trying to evaluate what the impact is going to be,“ says Warren, whose firm counts most of the Fortune 500 as clients. “Certainly the biggest thing on their mind is credit availability and money flow.”
“There's no visibility, so corporations aren't going to hire,” says Madeline Schnapp, director of Macroeconomic Research at TrimTabs Investment Research, adding that “Things sort of fell off a cliff,” in September, as the credit seize hit the economy.
TrimTabs employment data, which is based on the daily payroll data companies report to the Treasury, shows a job loss of 231,000 in September, a level not seen since late in the recession of 2001.
So, big pain may be on the way for the financial services sector
“So far there are no real cuts, firm cuts announced by Merrill[Lynch], Lehman [Brothers], Fannie Mae, Freddie Mac and other companies,” CEO John Challenger told CNBC. “You know it’s coming.”
Government job data bear that out. Payrolls in the financial services sector, which includes the insurance, mortgage and other industries, are down just 105,000 since their peak in August 07. (During the 2001 recession, payrolls actually rose—by 67,000.)
By contrast, the construction industry has lost 558,000 since its January 2007 peak, five times that of the 2001 recession, showing that the credit crunch has already taken its toll.
“Whatever data we have now is kind of a rear-view mirror situation,” says economist Christopher Rupkey of Bank of Tokyo-Mitsubishi. “The shock to the system following the Lehman bankruptcy is off the Richter scale in terms of magnitude. Next month will tell the tale.”