Pace of US Layoffs Lowest Since 2000: Challenger
Planned job cuts rose 11.6 percent to 41,432 in June, but the overall pace of downsizing fell to its lowest level in 11 years, according to a monthly survey by Challenger, Gray & Christmas.
The mid-year total of 245,806 layoffs is the lowest since the turn of the century, according to the report, which noted that since a lull in April, companies have been looking to increase the pace of job cuts in May and June.
“The employment picture remains a bit cloudy. Continued slowness in the pace of job cuts is certainly promising. However, hiring is coming in spurts and is not quite robust enough to make a significant dent in unemployment,” John A. Challenger, CEO of Challenger, Gray & Christmas, said in a statement accompanying the release that.
Strong payroll gains in between February, March and April were offset by slow growth in May, he added.
"The next three or four months of employment and hiring data will be important indicators of whether the expansion has prematurely hit the brakes or if the dips in job creation are simply bumps on the road to recovery,” he said.
The government sector is the most active in trimming staff, the Challenger report noted. The public sectors accounted for 77,591 of the total cuts, although the year-on-year figures show a slowing of the pace of layoffs. Almost 100,000 government jobs were lost in the first half of 2010.
The aerospace and defense industry, which is heavily exposed to government spending, has seen a considerable spike in downsizing this year. In the first half of 2011, the sector saw a 241 percent increase in job cuts over the previous year, from 6,121 to 20,851, according to the report.
Financial-services companies are still cutting staff, with 11,734 laid off in the first six months of 2011, up 18.5 percent on the previous year. Cuts in the industrial goods sector also increased.
Challenger said that while these are "bellwether industries" for the overall health of the economy, the cuts were low enough "to prevent alarm bells from sounding." There was no reason to predict a surge in job cuts in the second half of the year, he added.
"Any progress made on the hiring front will appear anemic due to the fact that we started in such a deep hole," Challenger said. "To provide some perspective, the 16-month long recession that stretched from July 1981 to November 1982 resulted in 2.7 million job losses from the nation’s payrolls. It took about 11 months for employment to return to pre-recession levels.
"Following the relatively short 2001 recession, which also saw 2.7 million jobs losses, it took nearly 40 months for payrolls to return to pre-recession levels… So, while we expect that employers will continue to steadily add jobs in the second half of 2011, at times it will appear that employment is standing still,” he said.