2014 September Job Cut Report: 30,477 Cuts Could Spell Lowest Year Since 1997
Monthly job cuts fell to their lowest level in 14 years in September, as U.S.-based employers announced workforce reductions totaling 30,477 during the month. As the fourth quarter begins, 2014 is on pace to be the lowest job-cut year since 1997.
The September total plunged 24 percent from the 40,010 job cuts announced in August, according to the report Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc. It was also 24 percent lower than the September total from a year ago, when employers announced plans to cut payrolls by 40,289.
Last month saw the fewest job cuts since June, 2000, when just 17,241 announced layoffs were recorded. The decline brings the 2014 monthly average down to 40,379. If this pace holds, the year could end with fewer than 500,000 job cuts for the first time since 1997 (434,350).
To date, employers have announced 363,408 planned layoffs, 6.2 percent fewer than the 387,384 cuts announced through September, 2013.
In the third quarter, job cuts totaled 117,374, which was down 5.9 percent from the previous quarter. The third quarter total was 8.6 percent lower than the same quarter a year ago, when 128,452 cuts were recorded.
“There have been a couple of bumps in the road for the economy lately, which caused consumer confidence to drop in its latest reading. However, as this report shows, the recent hiccups have not resulted in widespread layoffs. Job security is being helped by the fact that corporate profits remain near record highs. So, we may see some ebb and flow in the rate of hiring, but employers, at this point, are reluctant to make any over-correction in workforce levels,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
September job cuts were led by the entertainment industry, where the closure of casino resorts in Atlantic City resulted in more than 7,000 job cuts. Overall, employers in the entertainment and leisure industry announced 8,119 job cuts during the month, the most since December, 2005, when announced layoffs totaled 12,202.
The computer sector continues to lead all industries in terms of year-to-date job cuts, despite the fact that just 74 announced layoffs were reported by these firms in September. Employers in the computer industry have announced 49,002 job cuts, so far this year. That is nearly double the 27,892 computer-sector job cuts tallied in the first nine months of 2013.
“The Atlantic City cuts are not as much an indication of the overall economy as they are an indication of trends re-shaping the casino industry. As states allow more cities to open gambling establishments, destinations like Atlantic City, start to lose their draw. Atlantic City has not been able to mimic Las Vegas, where a diversity of entertainment options beyond gambling attract tourists,” Challenger noted.
“Unfortunately, the decline in tourism, the casino closures and loss of jobs are going to reverberate through the entire local economy there. Non-casino hotels, restaurants, theaters, etc., are going to feel the pinch and job cuts are likely to spread,” he added.
“While we are seeing some large cuts in certain industries, which are mostly resulting from shifting trends specific to those industries, the pace of job cutting continues to decline. There is the potential for a fourth-quarter surge in downsizing activity, if corporations are not hitting their earnings goals. However, over the last few years, since the end of the recession, the fourth quarter has been among the lowest job-cut quarters,” said Challenger.
Indeed, in four of the previous five years, the fourth quarter saw the fewest or second fewest job cuts of the year, according to Challenger data. In fact, from 2009 through 2013, the fourth quarter averaged 131,174 job cuts, making it the smallest job-cut quarter during that period. The fourth-quarter average was 18 percent lower than the next highest quarterly average during the five-year period: the second quarter, which averaged 160,721.
“The first quarter is the most active period for job cutting. So, looking ahead to 2015, we are likely to see a first-quarter surge. However, unless there is a major shock to the economy between now and the end of the year, the first three months of the new year should remain relatively low by historical standards,” said Challenger.