February Job Cuts Fall by 18%
After surging to a six-month high to begin the new year, downsizing slowed in February, as US-based employers announced 61,599 job cuts during the month, 18 percent fewer than the 75,114 in January, according to a report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The February total was up 22 percent from a year ago, when employers announced 50,579 job cuts during the month.
Planned job cuts total 136,713 through the first two months of the year, up 32 percent from the same period in 2015, when employers announced layoffs totaling 103,620 in January and February.
Just as in 2015, the energy sector has seen the heaviest job cutting in the opening months of the year. These firms announced another 25,051 job cuts in February, bringing the year-to-date total to 45,154. Most of the cuts in the sector have been attributed to low oil prices.
The 45,154 energy cuts through February represents a 24 percent increase from 2015, when employers in the sector announced 36,532 planned layoffs in the opening two months of the year.
“Low oil prices continue to take a toll on workers in the energy and industrial goods sectors. Since January of 2015, these two sectors alone have seen workforce reductions in excess of 200,000, the majority of which were attributed to oil prices. The major concern is that the job losses in cities and towns that rely heavily on oil production will begin to drag down other parts of the local economy,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“Shockingly, we have not seen a precipitous rise in unemployment in the many cities that were benefitting from the recent oil boom, suggesting that the job losses are contained to the energy sector, for the moment,” said Challenger.
Several energy-centric metropolitan areas have seen unemployment rates increase, but most are still enjoying rates that are below the national average. The latest available date from the US Bureau of Labor Statistics shows that the unemployment rate in Houston increased from 4.0 percent in December 2014 to 4.6 percent in December 2015.
In Midland, Texas, the unemployment rate increased by more than one percentage point in 2015, but remains at an enviable 3.3 percent. As of December, Bismarck, North Dakota – another city that benefitted significantly from the oil boom – is still enjoying an unemployment rate of 2.7 percent, which is actually lower than the 3.1 percent unemployment rate recorded in December 2014.
In addition to energy, another area experiencing increased job cuts is the technology sector. Announced layoffs by computer firms this year total 16,006, which is a 143 percent increase from the 6,582 job cuts recorded in the first two months of 2015.
“There will always be heavy churn in the tech sector. It is an area that embodies change, trial and error, and constant reinvention. There is more start-up activity in the sector, but that also means there are more failures. Even among the more established firms in the industry, we see workforce volatility, as they branch into new products or services, some of which may or may not succeed,” said Challenger.