from Challenger Gray and Christmas
The pace of downsizing increased in April, as US-based employers announced workforce reductions totaling 65,141 during the month
The April figure represents a 35 percent increase over March, when employers announced 48,207 planned layoffs. Last month’s job cuts were 5.8 percent higher than the 61,582 recorded in April 2015.
Employers have announced a total of 250,061 planned job cuts through the first four months of 2016. That is up 24 percent from the 201,796 job cuts tracked during the same period a year ago. It is the highest January-April total since 2009, when the opening four months of the year saw 695,100 job cuts. Said John A. Challenger, chief executive officer of Challenger, Gray & Christmas:
We continue to see large scale layoffs in the energy sector, where low oil prices are driving down profits. However, we are also seeing heavy downsizing activity in other areas, such as computers and retail, where changing consumer trends are creating a lot of volatility.
The energy sector announced another 19,759 job cuts in April, bringing the year-to-date total to 72,660. That is up 26 percent from the 57,556 energy-sector job cuts announced in the first four months of 2015.
Computer firms announced 16,923 job cuts during the month; the highest total among all industries. That total includes 12,000 from chipmaker Intel, which is shifting away from the traditional desktop and laptop market and toward the mobile market.
To date, computer firms have announced 33,925 job cuts, up 262 percent from a year ago, when job cuts in the sector totaled just 9,368 through the first four months of the year. Noted Challenger:
For all intents and purposes, the economy remains strong. The nation’s payrolls have experienced 66 consecutive months of net job gains, a trend that is likely to continue with the new report out Friday. The unemployment rate is at five percent, with a growing number of metropolitan areas at three percent or lower. Yet, job cuts are trending upward.
However, it is not unusual to see heavy job cuts a strong economy. In December 1998, near the height of the dot.com boom, we recorded more than 103,000 planned workforce reductions. The fact is, companies are constantly retooling, and sometimes the best time to do that is when the economy is strong.
A prime example of this dichotomy is IBM, where unconfirmed reports estimate as many as 14,000 layoffs in the first quarter (which is not included in any Challenger reports, due to the speculative nature of the figure). While the company has said little about the job cuts, it issued a statement touting 70,000 new hires in 2015 along with 25,000 open positions worldwide.
The closest IBM came to confirming workforce reductions was to say that it is “aggressively transforming its business to lead in a new era of cognitive and cloud computing. This includes remixing skills to meet client requirements” in its official statement. Concludes Challenger:
We are at a stage in the recovery, where it is not unusual to see hiring and firing occur simultaneously across the economy and often within a single company. Like IBM and Intel, companies are shifting strategies that require them to cut in some places while adding in others.
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