June 2013 Challenger Job Cuts Higher than One Year Ago

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.