MORE THAN 50,000 CUTS FOR ONLY SECOND TIME IN 2014; HIGHEST OCTOBER TOTAL SINCE 2009
from Challenger Gray and Christmas
Just one month after falling to a 14-year low, monthly job cuts surged nearly 70 percent in October to the second highest total this year.
U.S.-based employers announced 51,183 job cuts last month, a 68-percent increase from September’s 30,477, which was the lowest monthly total since June, 2000 (17,241). October job cuts were 12 percent higher than the 45,730 layoffs announced during the same month a year ago.
The October total is not only the second highest of the year behind May’s 52,961, but it marks only the fourth time in the last 22 months that job cuts exceeded 50,000.
Employers have now announced 414,591 job cuts so far this year. That is 4.3 percent fewer than last year, when 433,114 job cuts were reported from January through October.
John A. Challenger, chief executive officer of Challenger, Gray & Christmas stated:
While it is too early to say for certain, the October figure may mark the kick-off to a fourth-quarter surge in job cuts. It is not unusual to see the pace of downsizing accelerate in the final months of the year, as employers take measures to meet year-end earnings and profit goals.
In recent years, since the end of the recession, the fourth quarter surge in job cuts has been somewhat subdued, with much of the increase occurring in October and November. In fact, in the previous two years, December was one of the lowest job-cut months.
October job cuts were led by the retail industry, which announced 6,874 planned layoffs during the month. That is nearly 3.5 times more than the 1,965 job cuts announced by retailers in September. To date, these employers have now announced 38,948 in 2014, second only to the computer industry.
Computer firms announced another 6,509 job cuts in October. That brings the year-to-date total for the industry to 55,511, making it the leading job-cut industry by a wide margin. Challenger added:
If there is any good news in the October job-cut surge, it is that the leading job cuts are not indicative of overall weakness in the economy. The heaviest cuts came from companies that are struggling to find their footing in this recovery. In several cases, downsizing organizations are in industries that are going through fundamental changes and these companies are taking steps to catch up to these changes.
For example, Sears, which announced the closure of 77 Sears and Kmart stores, has been struggling for years to find its niche in an increasingly competitive retail space. The challenges facing the one-time leader in the retail space have gotten progressively worse as more and more consumers take their shopping online.
Meanwhile, Hewlett-Packard, which announced it is increasing previously announced workforce reductions by another 5,000, is another company trying to catch up in an ever-changing, but still robust and competitive technology sector. Likewise, wireless service provider Sprint has undergone large-scale job cuts since the beginning of the year in an effort to better compete in its fiercely competitive sector.