By James Limbach
ConsumerAffairs.com
October 1, 2009
While the economy is not yet creating jobs, the number of jobs being lost is on the decline.
According to the latest job-cut report released by outplacement consultancy Challenger, Gray & Christmas, Inc, the number of positions eliminated during September fell to the lowest level since March 2008, as employers announced plans to reduced payrolls by 66,404 positions. That's a drop of 13 percent from the 76,456 job cuts announced in July.
The September figure was 30 percent lower than the same month a year ago, when employers announced 95,094 job cuts. This marks the fourth consecutive month in which job cuts declined from the year-ago level.
For the quarter ending September 30, planned job cuts totaled 240,233, the lowest quarterly sum since the first quarter of 2008 (200,656). Third-quarter job cuts were 24.5 percent lower than the 318,165 reductions announced in the second quarter and 16.3 percent lower than the third quarter of 2008, when 287,142 job cuts were announced. Since the first quarter of the year, when job cuts reached a seven-year high of 578,510, the pace of layoffs has dropped 58.5 percent.
While downsizing has slowed dramatically since the beginning of the year, job cuts are on pace to surpass the 2008 year-end total of 1,223,993. Employers have already announced 1,136,908 through September, which is 49 percent higher than last year's nine-month total of 763,090.
"The downward trend in planned job-cut announcements is certainly a sign that employers feel more optimistic about future business conditions," said Rick Cobb, executive vice president of Challenger, Gray & Christmas. "Further evidence of this increased confidence was demonstrated earlier this week by a spate of merger activity. It could be a while before this increased confidence results in job creation, but we are going in the right direction."
The heaviest job cuts in September occurred in the still-struggling automotive sector. The 22,114 announced by these employers is the largest monthly tally since April's 24,172 cuts. So far this year, automotive companies have announced plans to reduce payrolls by 151,020 workers, which is just shy of the record annual high of 158,766 reached in 2006.
Still, the automotive sector is not the leading job-cut industry to date. That title goes to the government and non-profit sector, which has announced 155,602 job cuts since January, including the 7,563 announced in September. The largest number of reductions in the sector was recorded in 2003, when employers announced 177,215 job cuts.
"State and local governments are in a precarious situation. They are seeing their costs increase as more unemployed citizens rely on government-sponsored safety-net programs. At the same time, these governments' income streams from income taxes, property taxes and corporate taxes are shrinking. We could continue to see heavy downsizing in this sector for several more months, until employment in these cities and states begins to recover," said Cobb.
Beyond the heavy job cuts in the automotive and government sectors, other industries are improving. Reductions in the industrial goods sector, which is the third largest downsizing industry with 104,029 to date, have declined in each of the last two months. The third-quarter job-cut total for the sector was 13,664, compared with 60,332 in the first quarter.
The retail sector has also seen job cuts decline significantly since the first quarter. Retailers announced 9,724 job cuts between July and September, 87 percent fewer than the 76,548 cut announced in the first three months of the year.
"Retailers saw better-than-expected back-to-school sales, which may bode well for the all-important holiday selling season," said Cobb. "Retailers will hire extra seasonal workers this year, as they do every year. However, the hiring will not be robust by any measure. It may outpace last year's holiday hiring, but that is not saying much, considering retailers added the fewest seasonal workers in nearly 20 years."
