Job cuts increased by about 10 percent in June, as employers announced plans to reduce payrolls by 44,842 workers during the month. Meanwhile, heavier-than-expected downsizing throughout the first half of 2015 pushed the midyear total to its highest level since 2010, according to a report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
June job cuts were 9.3 percent higher than the 41,034 planned layoffs announced in May. They were 43 percent higher than June 2014, when job cuts totaled just 31,434. This marks the fifth year-over-year increase in job cuts in the first six months of 2015.
Overall, employers announced 287,672 job cuts during the first half of the year. That was up 17 percent from 2014, when the six-month total was 246,034. The midyear total is the highest since 297,677 job cuts were recorded in the first half of 2010.
The pace of job cutting was virtually unchanged between the first and second quarter of year. The 147,458 job cuts announced between April and the end of June was just 5.0 percent more than the 140,214 planned layoffs in the first three months of 2015. The second-quarter total was up 18 percent from a year earlier (124,693).
The first-half surge was due largely to the decline in oil prices, which rippled through the energy and industrial goods sectors. All told, the drop in oil prices was blamed for 69,582 job cuts in the first half of 2015. That is second only to the 86,978 job cuts attributed to “restructuring.”
The energy sector has taken the heaviest hit, cutting its workforce by 60,500 between January and June. Nearly 95 percent (57,168) of those were due to the drop in oil prices. At this point last year, the energy sector had announced just 3,908 job cuts.
Energy is not the only area experiencing increased job cuts. Unexpectedly, the retail sector ranks second in job cuts for the year, having announced 45,230 planned layoffs to date. That is up 68 percent from a year ago (26,863).
“Retailers should be enjoying the benefits of falling oil prices, as consumers have the money they are saving at the gas pump to spend elsewhere. However, it appears that consumers were hording that cash, at least through the first half of the year. The most recent data suggests that consumers are finally starting to loosen up the purse strings,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
Last week, the United States Commerce Department reported that consumer spending increased 0.9 percent in May, up from a 0.1 percent increase the previous month. The May surge was the biggest monthly increase in nearly six years.
Even if consumers start spending consistently, retailers are always vulnerable to changing consumer trends, technology and operational factors. Retail was the leading job cutting sector in June with 17,947 job cuts. Most of those were related to the closure of all Canadian stores by Minnesota-based Target.
“Not all retail cuts are due to frugal consumers. In Target’s case, the retail chain simply made significant missteps when entering Canada two years ago and never gained traction among Canadian shoppers. The store closures, which resulted in 17,000 job cuts for the American-based employer, was among the first decisions by new CEO Brian Cornell, who is determined to revitalize the store here in America,” said Challenger.
“With consumers starting to spend more, we should see job cuts in retail start to decline in the second half of the year. We have already started to see a decline in oil-related job cuts as prices have begun to stabilize. Over the past two months, oil prices were blamed for just 1,297 job cuts. In contrast, oil prices caused 20,675 job cuts in April.
“Overall, we expect the pace of downsizing to slow in the final six months of 2015. The factors that were contributing to increased cuts in the first half of the year appear to subsiding,” he concluded.
