August Job Cuts Drop After July Surge
Published September 2, 2015
Monthly job cuts plunged by more than 60 percent in August after surging to a four-year high in July on massive cuts in military staffing, according to the report Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc.
Employers in the U.S. announced plans to shed 41,186 workers from payrolls last month, a 61 percent decline from the 105,696 layoffs in July. The July figure was the highest since September 2011, when monthly job cuts reached 115,730.
The August total was 2.9 percent higher than the same month a year ago, when 40,010 planned job cuts were announced. This marks the seventh month this year that the job-cut total was higher than the comparable month from 2014.
To date, employers have announced 434,554 job cuts in 2015. That is up 31 percent from the 332,931 planned layoffs in the first eight months of 2014. With monthly totals averaging 54,319, 2015 job cuts are on track to exceed 650,000 for the year, which would be the highest year-end tally since 2009 (1,272,030).
The retail sector saw the heaviest job cutting in August, with 9,601 planned layoffs reported during the month. Most of those were related to bankruptcy of east coast supermarket chain A&P, which is closing more than 100 stores and laying off a reported 8,500 workers by Thanksgiving.
The retail sector has announced 57,363 job cuts so far this year, which is a 90 percent increase over the 30,109 job cuts announced by this point in 2014.
“Overall, retail is relatively healthy, but we have seen some big layoffs this year, particularly from long-time players that simply have not been able to keep up with changing consumer trends. These retailers somehow manage to survive, but only through multiple bankruptcies, such as A&P. Earlier this year RadioShack announced 5,400 job cuts,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“Going forward, the recent volatility in the stock market may have a negative impact on retail sales, as investors who took a hit curtail spending. However, retailers may be reluctant to shed too many workers as we head into the holiday season. Overall, we have not seen any job cuts attributed to the stock market’s swoon. We are more likely to see cuts resulting from the underlying cause of the volatility, which is the weakening economy in China and other developing nations,” said Challenger.
The industrial goods sector saw the second heaviest downsizing activity in August, announcing 7,949 layoffs during the month. That is the largest number of job cuts for this sector since March, when 9,163 job cuts were announced.
About 22 percent of the industrial goods cuts were related to the recent drop in oil prices. In all, 3,808 job cuts were attributed to oil prices last month, which is down 57 percent from 8,878 oil-related job cuts in July.
Since the beginning of the year, oil prices have been blamed for 82,268 layoffs, mostly in the energy sector, but also among industrial goods manufacturers that supply equipment and materials for oil exploration and extraction.
“The stream of job cuts related to oil prices appears to be ebbing. The majority of these cuts came in the first four months of 2015, when we saw more than 68,000 layoffs related to oil. Since May, fewer than 14,000 job cuts have been attributed to oil prices,” noted Challenger.
“It is too soon to say if we have seen the last of the big oil cuts. As we head into the final months of 2015, there are definitely some red flags that suggest we may see more layoffs from the energy sector, as well as in other areas of the economy. The problems that China is facing could send shockwaves throughout the global economy, including the United States,” Challenger continued.
“The last quarter of the year is also when we tend to see companies make workforce and operational adjustments in order to meet year-end earnings goals,” he added.
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