Job Cuts Decline From 6-Month High
Published OCTOBER 3, 2013
Planned job cuts fell to their lowest level in three months, as U.S.-based employers announced plans to reduce payrolls by 40,289 in September. That was down 20 percent from August, when job cuts reached a six-month high of 50,462, according to the latest report on monthly job cuts released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The September total was 19 percent higher than the 33,816 planned job cuts announced the same month last year. This marks the fourth consecutive month that saw heavier job cutting than a year ago.
As a result of this trend, job cuts in the third quarter were up 25 percent from a year ago. Overall, 128,452 planned cuts were announced during the three month period ending September 30, compared to 102,910 over the same stretch last year. The third-quarter total was 13 percent higher than the second quarter, when 113,891 job cuts were announced.
Despite the recent surge, the overall pace of job cutting in 2013 is virtually unchanged from a year ago. To date, employers have announced 387,384 job cuts, up 0.4 percent from the 386,001 announced from January through September in 2012.
For the third time in the last five months, the health care sector was the leading announcer of job cuts, with reported layoffs totaling 8,128. That is the highest monthly job-cut total for this sector since November 2009, when these organizations announced 9,558 job cuts. The sector has now announced 41,085 job cuts in 2013, which is 13.4 percent more than the 36,212 health care job cuts announced in all of 2012.
“The health care sector is adjusting workforce levels due to cutbacks in Medicare and Medicaid reimbursements initiated under the Affordable Care Act as well as overall reductions in federal spending due to sequestration. A prime example of this occurred last month, when the Cleveland Clinic announced plans to reduce its headcount by 3,000, accounting for more than one-third of the health care cuts during the month. It attributed the cuts to lower government payments under health care reform,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“It is important to remember that while it is critical for government spending to be reduced in order to shrink the nation’s deficit, these cutbacks do not occur in a vacuum. They have real-world consequences that ripple throughout the economy. So, the push to cut federal spending, while absolutely necessary, is going to impact jobs both inside and outside of the government. We are seeing it in health care, education, and aerospace and defense,” said Challenger.
After health care, the financial sector experienced the next largest number of job cuts in September.
These firms announced 6,932 planned layoffs during the month, bringing the year-to-date total for the sector to 48,874, which is the most among all industries for the year.
“Many of the recent banking cuts have been concentrated in the mortgage business. A couple of trends are happening here to help drive up job cuts. Many banks brought in extra workers in their mortgage departments to help deal with the large number of foreclosures. The number of foreclosures is now shrinking, which is eliminating the need for these extra workers. Additionally, recent upticks in interest rates have lowered demand for refinancing, which, in turn, is lowering the need for workers to process these transactions,” noted Challenger.
“If there can be any silver lining in job-cut announcements, the banking cuts seem to be stemming from an improving economy. They are the result of fewer foreclosures and higher interest rates, neither of which would occur in a downward-heading economy. Home buying is increasing around the country, along with home prices. Hiring has been strong of late, and weekly jobless claims are declining to the some of the lowest levels we have seen since the end of the recession,” said Challenger.
Challenger pointed out that there are still many challenges for this economy, the latest being the government shutdown. However, the one-day-old shutdown has had no noticeable impact on the economy, yet. The stock market saw gains on the first day of the shutdown and it did not stop Amazon.com from announcing plans to hire 70,000 seasonal workers for the upcoming holidays.
Amazon joins several other nationwide retailers who have already announced holiday hiring intentions, including Macy’s, which plans to hire 83,000; Target, hiring 70,000; and Walmart, 55,000. All told, hiring announcements totaled 444,617 in September, with 99 percent coming from seasonal plans
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Unemployment Applications Drop As Number Receiving Aid Hits New Low
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The numbers were stronger than expected, reinforcing a new report by job-placement firm Challenger, Gray & Christmas indicating employers are currently planning fewer layoffs than at any other time in the last 14 years. If current trends continue, 2014 could have the lowest number of expected job cuts since 1997, CNBC reports. The report reflects the continued recovery of the U.S. economy and labor market. But not all numbers are looking as rosy: Consumer confidence fell sharply in September after heating up over the summer, which could also mean a hit to this month’s jobs numbers, which will be released on Friday.
