from Challenger, Gray & Christmas, Inc.
The pace of downsizing declined slightly in the second month of the new year, as U.S.-based employers announced plans to cut payrolls by 41,835 in February. The February total was 7.3 percent lower than the 45,107 job cuts employers announced to kick off 2014.
February job cuts were down 24 percent from the same month a year ago, when 55,356 planned layoffs were recorded. It was, in fact, the lowest February total since 35,415 job cuts were announced in 2000.
Through the first two months of 2014, employers announced 86,942 planned job cuts, which is 9.2 percent fewer than the 95,786 job cuts tracked in January and February of 2013. At the current pace, with job cuts averaging 43,471 per month, the first quarter could see the fewest announced layoffs since 1995, when job cuts totaled 97,716 through the end of March.
The financial sector experienced the heaviest job-cut activity in February, with these institutions announcing plans to cut 9,791 workers in the coming weeks and months. That is about double the 4,817 job cuts announced by financial services firms in January. It is largest monthly toll in the sector since last February, when these employers announced 21,724 job cuts.
Top 5 Job-Cut Sectors in February
John A. Challenger, chief executive officer of Challenger, Gray & Christmas stated:
While some of the cuts in the financial sector were related to cutbacks in mortgage lending operations, a large portion of the banking workforce reductions in February were due to the ongoing shift away from branch banking toward increased mobile banking. This is trend that is gaining momentum and undoubtedly will have a profound impact on banking employment levels in the coming years. The number of bank tellers and traditional banks will continue to shrink as more people manage their bank accounts over their phones, on their laptops, and at ATMs and kiosks .
Last month, JP Morgan Chase revealed an additional 3,500 cuts in its consumer operations. According to reports, most of these will come from its branch network. However, these are not cuts from a weakening economy or a struggling bank. These are proactive moves by CEO Jamie Dimon in recognition of the coming sea change in the way people bank. The bank has shifted from a ‘branch-building strategy to an optimization strategy.’ In other words, Chase will have more places to bank, but technology will replace tellers for day-to-day banking. Meanwhile, the bank promises to provide more personalized asset-management services for those seeking more financial planning guidance.
These are the kinds of cuts we don’t see in a recession. These are successful companies taking proactive steps to adjust to new realities.
Of course, retail banking is being impacted by the same technology trends that are altering the consumer products retail landscape. Last month, we saw significant job cuts from Best Buy and the closure of two-thirds of the U.S. Sony retail stores. It’s not that Americans are buying fewer consumer electronics, clothes, and household goods. What has changed is how and where they buy these products. Pretty much every brick-and-mortar retailer these days, whether it is selling clothes, books, TVs or refrigerators, has to have an Amazon.com strategy, which basically boils down to fewer stores, smaller sales staff, lower prices and heavier focus on internet sales.
Retail had the third highest job-cut total in February, with 3,848 announced layoffs. It ranks as the top job-cutting industry for the year, with 15,242 cuts over the first two months. The two-month total is up 70 percent from a year ago, when retailers cut 8,955 over the same period.