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posted on 05 January 2017

December 2016 Job Cuts Up But 1916 Totals Down 12% Year-over-Year

from Challenger Gray and Christmas

The pace of downsizing ticked up slightly to close out 2016, as U.S.-based employers announced plans to shed 33,627 jobs from payrolls in December

December job cuts were up 25 percent from November's 26,936, the lowest monthly total of 2016. The December total was well below the 43,910 job cuts averaged monthly throughout the year.

Last month's tally was 42 percent higher than the same month a year ago, when employers announced planned layoffs totaling 23,622, which was not only the lowest monthly total of 2015, but the lowest monthly total in more than 15 years.

December marked the third consecutive month in which job cuts remained significantly below the annual average. In all, just 91,303 planned job cuts were reported in the final quarter of 2016. That is the lowest quarterly total since Q2 of 2000, when employers announced only 81,568 planned layoffs.

Employers announced a total of 526,915 job cuts in 2016. That is 12 percent fewer than the 598,510 cuts tracked in 2015. The 2016 total sits below the 539,581 annual job cuts averaged since 2010, which marked the first year of recovery in the wake of the Great Recession.

The heaviest job cuts in 2016 occurred in the energy sector, which announced 107,714 layoffs during the year. That was up 14 percent from 2015, when these firms cut 94,409 job cuts.

Most of the energy cuts were announced in the first half of 2016, as the industry continued to suffer from historically low oil prices. Between January and June, layoffs in the sector totaled 77,211.

TOP FIVE INDUSTRIES

Year To Date

2016

2015

Energy

107,714

94,409

Computer

66,821

62,191

Retail

59,324

65,858

Industrial Goods

33,435

57,625

Financial

22,015

28,409

MONTH BY MONTH TOTALS

2016

2015

January

75,114

53,041

February

61,599

50,579

March

44,207

36,594

April

64,141

61,582

May

30,157

41,034

June

38,536

44,842

July

45,346

105,696

August

32,188

41,186

September

44,324

58,877

October

30,740

50,504

November

26,936

30,953

December

33,627

23,622

TOTAL

526,915

598,510

Some reductions are identified by employers as workers who will take early retirement offers or other special considerations to leave the company.

LAYOFF LOCATION

Year To Date

Texas

104,261

California

84,224

Arkansas

26,244

New York

25,227

Illinois

23,028

Listings are identified by the location of the layoff or corporate headquarters as stated in announcement.

Copyright 2017 Challenger, Gray & Christmas, Inc.

As prices started to recover in the second half of the year, job cuts declined sharply. Additionally, of the 30,503 energy cuts in the second half of 2016, about 20 percent came from companies in the renewable energy industry, including wind and solar. In contrast, cuts from renewable energy firms accounted for just under 11 percent of the 77,211 energy sector layoffs announced in the first half of the year. Said John A. Challenger, chief executive officer of Challenger, Gray & Christmas:

Oil prices are back on the rise. The new administration poised to take over the White House in January could further benefit the industry by relaxing regulations and drilling restrictions. Oil companies may once again start to expand in 2017. Ironically, the only obstacle in their way may be a shortage of skilled workers.

"When the last boom got underway, oil firms had the luxury of building their workforces amid high unemployment across the nation. Before the most recent downturn, drilling firms were already struggling to find workers. Now, they will have to rebuild their workforces at a time when unemployment nationwide is below 5.0 percent. In many areas, the rate is much lower. In fact, there are nearly 50 metropolitan areas with unemployment rates of 3.0 percent or lower," said Challenger.

Job cuts were also up in the computer industry in 2016. These firms announced 66,821 job cuts during the year, 7.4 percent more than in 2015 (62,191).

Rounding out the top five job-cutting industries of the year were retail (59,324), industrial goods (33,435), and financial (22,015), each of which saw annual job cuts decline from the previous year. Challenger concludes:

Last year appeared to be an adjustment year for many big tech firms. Long-time hardware makers, including IBM and Hewlett-Packard, are undergoing multi-year transformations that will ultimately shift their business away from hardware toward services. Others, including Microsoft, Dell and Intel, are shifting toward mobile while, at the same time, attempting to become more agile.

It is hard to say how the tech sector will do under the new administration. Many rely on offshoring as well as the employment of foreign talent immigrating to the U.S. Both of those business practices are likely to come under threat in the coming year. However, the new administration's pro-business policies may ultimately favor these firms and many others. Only time will tell.

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