Ahead of Friday’s big government jobs report, the markets are scrutinizing a few gauges on the state of the U.S. labor market.
First, the ADP report on Wednesday showed the private sector added slightly more jobs in October than expected. The payroll processor said businesses created 182,000 new jobs versus the estimated 180,000.
On Thursday morning, we learned layoffs in October fell 14% from the previous month. According to global outplacement firm Challenger, Gray & Christmas, the country’s employers announced plans to cut 50,504 workers from their payrolls last month.
The energy sector saw the heaviest number of cuts last month with 17,344 jobs slashed. Far behind in second place was the retail sector at 5,153 layoffs in October. Turmoil in oil prices has taken 101,383 jobs, so far this year.
Big companies including Chevron (CVX), Halliburton (HAL), Schlumberger (SLB), and Baker Hughes (BHI) have all reported at least two rounds of layoffs in 2015. “It cut a lot of jobs at the end of last year, was the leading sector cutting jobs at the beginning of the year and then there was a period of where it seemed to slow down but now it's picking up again,” noted John Challenger, CEO of Challenger, Gray and Christmas.
Unfortunately, Challenger doesn’t see job cuts in the oil-related field letting up anytime soon. “I think we're in for another round here,” he said. “What's so interesting right now is that we're seeing cuts with a very low unemployment, heavy cuts,” he added.
However, oil prices were the second reason for job cuts last month. Restructuring was the number one excuse employers gave for layoffs. “We're seeing big private equity, hedge funds, companies come in buy companies that are inefficient…and make the cuts early,” said Challenger.
Despite being the bearer of negative news on the jobs front, Challenger is optimistic on the country’s labor market. “I think this bodes well because it says the period of expansion may last longer,” he said. Challenger thinks companies will soon find themselves with no more available workers and “good skilled jobs…don’t really ever go away.”
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