from Challenger Gray and Christmas
Job cuts declined for a second consecutive month in December, as U.S.-based employers announced plans to reduce payrolls by 32,640. It was the third lowest monthly total of 2014; a year that saw the fewest planned job cuts since 1997.
December job cuts were down 9.2 percent from 35,940 planned layoffs in November. Despite the decline, last month’s total was still 7 percent higher than the same month a year ago, when employers announced 30,623 job cuts, which happened to be the lowest monthly tally in 2013.
Overall, employers announced job cuts totaling 483,171 in 2014. That is 5.0 percent fewer than the 509,051 cuts tracked in 2013. It was the lowest annual total since 434,350 job cuts were recorded in 1997. Said John A. Challenger, chief executive officer of Challenger, Gray & Christmas:
Layoffs aren’t simply at pre-recession levels; they are at pre-2001-recession levels. This bodes well for job seekers, who will not only find more employment opportunities in 2015, but will enjoy increased job security once they are in those new positions,” .
Of course, no job is ever 100 percent secure. After all, we did record an average of 40,000 planned job cuts per month in a period of economic and employment growth. Even in the best economy, companies fail. Meanwhile, successful companies still may shift product focus, cut costs or implement other strategies that result in workforce adjustments.
In 2014, the top three job-cutting industries of the year are all examples of sectors that are, for all intents and purposes, enjoying the fruits of expansion. However, various companies for various reasons made significant cuts to their payrolls.
Despite the overall strength of the tech sector, employers in the computer industry saw the heaviest downsizing of the year, announcing a total of 59,528 planned layoffs. That is 69 percent more than a year ago, when these firms cut 35,136 jobs. A large portion of the pink slips came from tech giants Hewlett Packard and Microsoft, where both are attempting to become more nimble in a very competitive market.
Job cuts in the retail sector declined by 11 percent in 2014, but the industry still ranked second with 43,783 layoffs announced during the year, including 2,195 in December. The third-ranked health care sector also saw fewer layoffs last year, going from 52,637 job cuts in 2013 to a 2014 total of 38,359.
Overall, 16 of the 28 industries tracked by Challenger saw fewer layoffs in 2014, with an average decline of 34 percent. The insurance industry experienced the biggest decline, with job cuts falling 65 percent from 6,519 in 2013 to 2,259 last year.
The largest increases in job cuts occurred among employers in the entertainment industry and electronics, where job cuts more than doubled in both. In the entertainment and leisure industry, job cuts jumped 125 percent from 14,342 in 2013 to 32,235. Job cuts in the electronics industry went from 8,830 to 19,408; a 120 percent surge. Said Challenger:
While 43 percent of industries saw job cuts increase in 2014, it was pretty clear that these gains were not indicative of impending trouble down the road. We expect downsizing to remain subdued in 2015, as a growing number of employers turn their attention toward job creation.
The biggest threat to the job market’s momentum could be falling oil prices, which may lead to increased job cuts in one of the high-flying sectors of 2014: energy. Lower prices mean less money for research, exploration and new drilling operations.
In fact, just this week, U.S. Steel announced plans to shutter a plant that manufactures the specialized pipes used in oil and gas exploration and extraction. The resulting 768 layoffs will be counted in January layoff figures and may be precursor of what is to come if prices remain as low as they are now or continue to fall.
However, the slowdown in oil-related industries may be more than offset by the extra dollars in consumers’ pockets as they shell out less money for gas and heating oil. The money not spent at the pump can be used for consumer goods, travel, home improvement, and dining out. Furthermore, continued low gas prices could spur an increase in SUV sales. All of these are going to have an immediate and positive impact on the job market and hiring.
Continued improvements in the housing market, the Affordable Care Act, and new technology advancements are expected to drive the economy and employment gains in 2015.
More homeowners are coming out from being underwater and are eager to put their homes on the market. One just needs to drive around the nation’s cities and suburbs to see that home building activity has picked up significantly in the last six months. There are also a lot more ‘for sale’ signs up in front yards. This activity alone will boost the economy.
There also some promising long-term trends that will help drive job creation now and in the future. One of those trends is the consumerization of the drone industry. It may sound silly, but the expanded use of unmanned aircraft beyond military applications is expected to add 100,000 jobs to the economy over the next decade, according to one recent report.