Challenger Job Cut Report Shows (Normal?) Seasonal Jump

February 2nd, 2012
in econ_news

Econintersect: Outplacement agency Challenger, Gray & Christmas, Inc. reported 39% higher layoffs in January 2012 than January 2011 - but there is a story why readers should not believe why this is not an ominous start to 2012.

Econintersect normally publishers the Challenger data with the ADP Jobs Report (published yesterday).

John A. Challenger, chief  executive officer stated:

Last year’s 38,519 January job cuts represent the lowest first-month total on record. Even then, the January 2011 total was higher than the previous month, when 32,004 job cuts were announced. This year marks the sixth consecutive year and the eleventh out of the last thirteen in which January job cuts surpassed the December total.

Follow up:

Leading the January surge were retailers and financial firms, which announced 12,426 job cuts and 7,611 job cuts, respectively. The retail total was the largest experienced by this sector since January 2010 (16,737). The retail job losses are unrelated to the departure of seasonal workers, which typically are not announced or reported as job cuts. Rather, the cuts are related to restructurings, store closings and other cost-cutting measures.  The 7,611 job cuts in the financial sector mark the largest one-month total since September 2011, when 31,167 job cuts were announced (most of which came from a single announcement by Bank of America).

For the second consecutive month, the government sector saw relatively few job cuts, with these employers announcing just 3,021 layoffs in January.  That was up slightly from 2,183 in December. The two low job-cut months is undoubtedly a welcome trend in a sector that averaged 15,255 job cuts per month in 2011 and announced a total of 325,319 job cut in the 24-month period ending in December.

Of course, it is far too early to say whether we will continue to see low job-cut figures in government. It is highly unlikely, considering that many cities and states continue to struggle with budget deficits. And, then there is the federal level of government, which remains under intense pressure to cut costs. As a result, we expect government layoffs to be heavy again this year.

source: Challenger


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