U.S. Job Cuts Hit 20-Month Low, but Layoffs Heavy Overseas: Challenger
U.S. employers laid off 32,239 workers last month, the fewest number of job cuts since December 2010, according to a new report by outplacement firm Challenger, Gray & Christmas. Job cuts have now declined for three consecutive months, but it may be too soon to declare a trend in the labor market, says John Challenger, CEO of Challenger, Gray & Christmas.
"Often layoffs slow down during the summer," Challenger says in an interview with The Daily Ticker. "We did see heavy layoffs in Europe last month...it may be a hint that some conditions could wash ashore. But this is good news no matter how you cut."
Challenger says the three-month decline could either be evidence of an improving job market or a slowdown in activity. The majority of job cuts come in the last quarter of the year, he notes, and the "light" number of layoffs show that CEOs are "standing pat" about hiring until after the outcome of the presidential election. Employers have announced more than 353,000 job cuts since the beginning of the year, a drop of 3 percent from last year according to Challenger. But job cuts were 15 percent higher in the first half of this year compared to the same point in 2011.
Challenger's firm also monitors layoffs of U.S. workers by overseas companies. Both Sharp Corp. and Research in Motion have announced plans to cut 5,000 jobs and Sony recently let go of 10,000 employees. Downsizing by foreign companies over the past few months could lead to large-scale job cuts at home, Challenger says.
"The U.S. does not exist in a bubble," he says. "The situation beyond our borders certainly will not inspire companies to start adding workers en masse."
The Bureau of Labor Statistics will release its highly anticipated jobs report on Friday morning and economists are forecasting a gain of 130,000 nonfarm payroll jobs last month. The economy added 160,000 jobs in July but the unemployment rate ticked up to 8.3 percent from 8.2 percent in June. Employers have added an average of 151,000 jobs per month this year compared to a monthly gain of 153,000 in 2011. There were 12.8 million unemployed people in July. Private payroll company ADP reported Thursday that U.S. companies added 201,000 jobs last month, the biggest gain in five months. The government reported that applications for state unemployment benefits fell 12,000 to 365,000 last week.
The weak job market has been a top talking point for Republican presidential nominee Mitt Romney. U.S. employers have added thousands of jobs every month over the past few years but many of those are low-wage jobs in the retail and food service industries, according to a new report by the National Employment Law Project.
