Challenger Report: 53,480 Announced Cuts Led by Tech, Trade Issues a Growing Concern
U.S.-based employers ramped up the pace of downsizing in August, as companies announced plans to cut 53,480 jobs from their payrolls. This is up 37.7% from July’s total of 38,845, according to the latest report on job cuts released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
August’s total is the fourth highest for job cuts this year, and marks the eighth consecutive time job cuts were higher than the corresponding month one year earlier. Last month’s total was the highest August total since 2009, when 76,456 cuts were recorded.
The August total is 39% higher than the 38,472 cuts announced in August 2018. So far this year, employers have announced plans to cut 423,312 jobs from their payrolls, up 36.2% from the 310,773 cuts in the first eight months of 2018. It is the highest eight-month total since 2015, when 434,554 cuts were announced.
“Employers are beginning to feel the effects of the trade war and imposed tariffs by the U.S. and China. In fact, trade difficulties were cited as the reason for over 10,000 job cuts in August," said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.
"We are continuing to see investor concerns shaking confidence in the market, and employers appear to be cutting workers in response to a slowdown in demand for their products and services," he added.
Technology led all sectors in August, with 15,355 announced cuts, including 488 cuts from Cisco. Tech companies have announced 341.2% more cuts this year over last year. The Government, both state and federal, announced 5,785 cuts last month, bringing the year-to-date total to 11,885. Health Care companies announced 5,040 cuts in August.
Meanwhile, Industrial Goods Manufacturing announced 3,822 cuts. This sector has announced 202.6% more job cuts so far this year than during the same period last year. Transportation companies announced 3,554 job cuts in August, while Food companies announced 3,010.
“A number of industries are experiencing job cut announcements well above last year’s numbers, all in sectors related to Retail, Housing, Energy, Manufacturing, and Automotive. They also tend to be in sectors that are grappling with some sort of legislation, tariff, or regulation,” said Challenger.
In fact, several industries have announced more than double the job cuts through the same period last year. Warehousing companies are cutting jobs in response to losing contracts with major Retailers and E-tailers or competition. Mining companies, like those dealing with coal and potash, are experiencing downturns. Companies that are operating in a shaky housing market, such as Real Estate and Construction, are also experiencing increased cuts.
Retail continues to lead all sectors in 2019 with 57,226 cuts, 2,059 of which occurred last month. That is 28% fewer cuts than the 79,478 announced in the same period last year. The Automotive sector has announced 36,148 cuts so far this year, the highest eight-month total since 2009, when 128,906 jobs were cut.
While job cuts are up in every region, companies located in the Southern United States have seen the largest jump in job cut announcements, as employers in this region have announced 53% more job cuts than through the same period last year: 90,337 compared to 58,964 in 2018. Companies in the Eastern United States had the second-largest percentage increase, with 46.6%, as employers in this region announced 119,689 cuts in 2019 compared to 81,616 last year (Table 3).
Note: Challenger has updated the names of two industries to better describe the companies that are tracked therein. “Computer” will now be labeled “Technology” and “Commodities” will now be called “Mining.”
Challenger is also breaking out Financial Tech firms, which will be referred to as “FinTech.” These changes are represented in Table 2 (Job Cuts by Industry) and Table 7 (Announced Hiring Plans).