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June 2013 Challenger Job Cuts Higher than One Year Ago

July 3rd, 2013
in econ_news, syndication

2013 Layoffs-to-date are under the previous year's levels.

Follow up:

39,372 JOB CUTS ANNOUNCED IN JUNE; MIDYEAR TOTAL DOWN 9% TO 258,932

Planned job cuts rose slightly in June, as employers announced workforce reductions totaling 39,372 during the month, up 8.2 percent from 36,398 in May.  While job cuts were up last month, the pace of downsizing through the first half of the year is down about nine percent from a year ago, according to the latest report on monthly job cuts released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

Led by increased job cuts in the computer and education sectors, June was 4.8 percent higher than the same month a year ago, when employers announced 37,551 planned job cuts.  For the quarter ending June 30, announced layoffs totaled 113,891, down 21.5 percent from the first quarter and 18.6 percent lower than the same three month period in 2012.

The slowdown in job cuts last quarter was responsible for an overall decline in job cuts through the first half of 2013.  Employers announced 258,932 job cuts through the six months of the year, 8.5 percent fewer than the 283,091 job cuts announced by the same point in 2012.  The six-month total is the second lowest since 2000, when employers announced 223,421 cuts from January through June.  The lowest six-month tally since 2000 was 2011, when job cuts totaled 245,806.

While job cuts have declined overall, four of the five industries with the heaviest layoffs so far this year have seen job cuts increase by an average of 60 percent.  Of the top five job-cutting sectors, financial service has experienced the heaviest downsizing and the largest year-over-year gain.  Job cuts in this sector are up 82 percent to 36,762, including 1,671 in June.  The second-ranked retail sector has announced 32,900 cuts this year, up 38 percent from 2012.   Meanwhile, job cuts in the health care sector are up 62 percent to 22,951.

Last month, job cuts surged in the computer sector, where employers announced 10,133 job cuts, bringing the year-to-date total for the sector to a fourth-ranked 19,930.  The education sector also saw its heaviest job cutting of the year in June, with 5,629 planned layoffs.

“The economy is picking up speed with housing and manufacturing staging comebacks.  Threats to job security still exist, however, in the form of federal spending cutbacks stemming from sequestration as well as potential fallout from implementation of health care reform,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“So far, most of the job cuts related to health care reform have come from health care providers adjusting to lower Medicare reimbursements and state Medicaid cutbacks.  As 2014 approaches, we could see more cuts related to health care reform as smaller employers, who are mandated to provide coverage if they have 50 or more full-time workers, cut the number of workers and/or hours to remain under the 50-worker threshold,” said Challenger.

“Larger companies may cut workers to offset the higher costs associated with providing affordable and adequate health care to all employees or paying $2,000 per worker for not providing coverage.  As for sequestration cuts, we are already seeing layoffs stemming from the mandated cuts in federal spending.  These cuts could go on well in to 2014, as private-sector firms with government contracts start to feel the impact as current contracts expire,” he added.

To date, Challenger has tracked 10,253 job cuts related to sequestration and other federal spending cuts.  The largest portion of the sequestration cuts have come from the aerospace and defense sector, which announced 4,366 layoffs between January and June.  Government employers have cut another 1,976 jobs related to sequestration.  Health care reform has been cited as the cause for 618 job cuts since the beginning of the year, all of which have occurred in the health care sector.

“Even if we see an increase in job cuts related to sequestration and health care reform, it is unlikely that the overall pace of downsizing will see a significant surge in the second half of the year.  In fact, health care reform may be just as likely to contribute to hiring as it is to job cuts.  One Iowa based call center recently announced plans to expand its staff by 120 workers after winning the contract to provide customer support services for the federal Affordable Care Act,” said Challenger.

“Meanwhile, home building, home sales and home prices are all on the rise, which bodes well for the overall economy, as it not only gets construction workers back on the job, but it fuels all kinds of economic activity, such as home improvement projects, hiring movers, buying new furniture and appliances, stocking new homes with food and household items, and so forth,” said Challenger.

“Right now, job cuts are on track to the have the second-lowest annual total since 2000.  We are heading into the third quarter, which is typically the slowest period for downsizing.  Last year, we tracked fewer than 103,000 job cuts in the summer quarter, which was, in fact, the lowest quarterly total since 81,568 job cuts were recorded in the second quarter of 2000.  Unless, there is a major shock to the economy in the second half of 2013, we could see layoff activity decline continue to decline toward pre-2000 levels,” noted Challenger.

 

QUARTER-BY-QUARTER

 

Q1

Q2

Q3

Q4

TOTAL

1989

9,850

10,100

24,085

67,250

111,285

1990

107,052

87,686

49,104

72,205

316,047

1991

110,056

76,622

147,507

221,107

555,292

1992*

110,815

85,486

151,849

151,850

500,000

1993

170,615

84,263

194,486

165,822

615,186

1994

192,572

107,421

117,706

98,370

516,069

1995

97,716

114,583

89,718

137,865

439,882

1996

168,695

101,818

91,784

114,850

477,147

1997

134,257

51,309

95,930

152,854

434,350

1998

139,140

131,303

161,013

246,339

677,795

1999

210,521

173,027

173,181

118,403

675,132

2000

141,853

81,568

168,875

221,664

613,960

2001

406,806

370,556

594,326

585,188

1,956,876

2002

478,905

292,393

269,090

426,435

1,466,823

2003

355,795

274,737

241,548

364,346

1,236,426

2004

262,840

209,895

251,585

315,415

1,039,735

2005

287,134

251,140

245,378

288,402

1,072,054

2006

255,878

180,580

202,771

200,593

839,822

2007

195,986

197,513

194,095

180,670

768,264

2008

200,656

275,292

287,142

460,903

1,223,993

2009

578,510

318,165

240,233

151,122

1,288,030

2010

181,183

116,494

113,595

118,701

529,973

2011

130,749

115,057

233,258

127,018

606,082

2012

143,094

139,997

102,910

137,361

523,362

2013

145,041

113,891

 

 

258,932

AVG

208,629

160,183

188,155

220,678

 

source and full report of layoffs and hirings: Challenger


 

 

 









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