January 7, 2010
Job-cut announcements in December fell to their lowest level since the beginning of the recession, just 11 months after reaching a seven-year high.
The job cuts figure -- 45,094 -- released by global outplacement consultancy Challenger, Gray & Christmas, Inc., was not low enough to prevent 2009 from becoming the heaviest downsizing year since 2002. But it offers a promising sign of fewer reductions in 2010.
In fact, one expertis predicting the jobless rate could start falling this year.
The December job cut total was the lowest since December 2007 -- down 73 percent from the same month a year ago and ten percent lower than November, marking the fifth consecutive decline in monthly firings. Since July, announced reductions have dropped by an average of 14 percent each month.
Overall, the pace of downsizing fell by 56 percent in the second half of 2009, with employers announcing just 391,355 planned job cuts
Despite the dramatic decline in over the last six months, employers still managed to announce 1,288,030 planned job cuts in 2009. That is a 5.3 percent increase from 2008 and the largest year-end total since 2002, when employers announced 1,466,823 cuts.
"It definitely was a bi-polar year when it came to downsizing," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. "In the first half of 2009, the economy was reeling from the ongoing housing market collapse, bank failures and the further deterioration of the country's manufacturing base; the automotive industry in particular. Somewhere in the second or third quarter, we turned a corner and, now, as we begin 2010, there are promising signs of continued improvement."
Among these promising signs are decreased job cuts in the industries hit hardest by the recession. Job cuts in the automotive industry, which saw the heaviest downsizing of the year with 174,192 total cuts, fell 54 percent from 119,496 in the first half of 2009 to 54,696 in the second half.
"Some of the decline in job cuts may have resulted from the government's stimulus activities. Increased confidence among business leaders may also have contributed. Some companies were able to preserve jobs by achieving cost-savings through wage freezes or reductions, involuntary furloughs and the elimination bonuses. Others made deep cuts in research and development," said Challenger.
The recovery from this recession will undoubtedly be slow, with the slowdown in job cuts is just half the battle. "The next step is increased hiring. This is always the slowest part of the bust and boom cycle, as cautious employers are reluctant to add too many workers too soon for fear of a recessionary relapse," said Challenger.
"This is not to say that no one is hiring," he added. "Over the last six months, our tracking uncovered planned hiring announcements totaling nearly 160,000 new jobs. That, of course, represents just a tiny fraction of the actual job creation activity, since most companies do not make formal announcements regarding hiring plans."
According to a survey conducted monthly by the Bureau of Labor Statistics, employers hired 3.97 million workers in October. On the last business day of the month, there were another 2.5 million job openings.
