Why April 2014 saw the best payroll numbers since January 2012 (Part 8 of 10)
What is the Challenger Job-Cut report?
The Challenger Job-Cut report is issued monthly by leading outplacement company Challenger, Grey & Christmas. The company’s services include outplacements, career transitions, change management, and executive coaching. The report measures corporate layoffs announced in the month using data from the state departments of labor. Job loss details are available by region, industry, and month. The report also provides monthly job hiring figures by industry. However, the report doesn’t distinguish between immediate and future layoffs, so it’s not a very good indicator for jobless claims. Also, the report doesn’t really define the boundaries between layoffs and attritions. The data provided is based on actuals and not seasonally adjusted.
The monthly Challenger, Grey & Christmas job cuts report for April was issued on Thursday, May 1. According to the report, corporate layoffs in April came in at 40,298, an increase of over 17% from March 2014 and ~6% over April 2013. Job cuts for the first four months of 2014, however, are ~12% lower than the comparable period in 2013. Corporate restructuring was reported as the number-one reason for job cuts, accounting for almost 29% of the layoffs announced, followed by businesses closing at 21%. The highest number of job cuts year-to-date in 2014 were announced in New York and California, at 23,169 and 22,413, respectively.
The retail industry tops the list in job cuts
The highest number of job cuts was recorded in the retail sector, at 6,993, followed by financials (4,124), aerospace (4,075), healthcare and health products (3,242), and food (2,865). The April job cut figures for retail include those announced by women’s apparel retailer Coldwater Creek (CWTR). The company’s petition for bankruptcy protection has been approved and CWTR is shutting down over 350 stores.
“Among the retailers announcing cuts in April was Coldwater Creek, which never found its footing after the recession and was forced to declare bankruptcy and shutter 350 stores. Like other retailers, it struggled amid a changing retail landscape, where more and more competition is coming from the internet,” the Challenger report stated.
Retailers have announced over 25,000 job cuts in 2014, including big box retailers like Wal-Mart (WMT) and Target (TGT). This is down from the 31,297 level reported in the comparable period last year. Online retailers like Amazon (AMZN), however, have remained unaffected by the general trend for job losses in the retail sector, with Amazon (AMZN) announcing hiring at new fulfilment centers in Washington State last month. Amazon (AMZN) also recruited over 20,000 personnel in the U.S. last year and announced hiring plans for 2,500 workers at its U.S. fulfilment centers in February.
In the next part of this series, we’ll discuss the Challenger job cut report in greater detail and also assess its impact on fixed income ETFs like the Core Total U.S. Bond Market ETF (AGG), which invests in the U.S. investment-grade bond market. Please read on.
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