May 2016 Job Cuts Fall to Five-Month Low to 30,157
The number of job cuts announced by U.S.-based employers fell sharply in May, with a total of 30,157 planned workforce reductions recorded during the month, according to the latest report released Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc.
The May total was 53 percent lower than the 64,141 job cuts announced in April. It represents the lowest monthly total since last December, when 23,622 job cuts were recorded.
Last month saw 27 percent fewer cuts than the same month a year ago, when employers reported plans to shed 41,034 workers from their payrolls.
To date, employers have announced 275,218* job cuts in 2016, 13 percent more than the 242,830 job cuts announced during the first five months of 2015.
Once again, monthly job cuts were led by the energy sector, though the May total was significantly lower than previous months. Firms in the sector announced another 7,572 layoffs in May, 60 percent fewer than the 18,759 cuts in April.
Energy firms have now announced 75,232 job cuts in 2016, 25 percent more than the 60,210 cuts announced in the sector from January through April a year ago.
“May could be the start of a summer slowdown in the pace of job cutting as companies take a pause following the period of heavy downsizing that started the year. In general, oil prices have improved somewhat since the beginning of the year, though they are still less than half of what they were at oil’s recent peak. However, the recent gains may be enough to at least temporarily slow job cuts in the sector,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“Outside of the energy sector, summer can be a time when major business decisions are set aside as companies take stock of strategies initiated in the first quarter. This is also a time when the general pace of business can slow as many employees, including key decision makers, take vacations and enjoy the fruits of their labor,” said Challenger.
Most industries saw job cuts decline in May. Among the most significant declines was in the computer industry, where job cuts plunged 83 percent from 17,015 in April to 2,836 in May.
Job cuts in the financial sector fell 68 percent to 901 announced job cuts in May, after reaching a four-month high of 2,847 in April. Meanwhile, retailers announced 75 percent fewer cuts in May, as layoffs went from 5,145 in April to 1,287, last month.
“Of course, not every summer brings a slowdown in job cuts. Last July saw announced layoffs soar to a four-year high of 105,696. However, last year’s spike was due primarily to massive troop and civilian cuts in the military. Being an election year, it is unlikely that we will see any major workforce changes at the federal level of the government,” said Challenger.
“In other areas of the economy, the latest news is mixed as we head into the summer. Construction spending and auto sales dipped, but manufacturing activity is up. Consumers are less confident in the most recent reading, yet travel plans and spending are expected to increase significantly this summer. The mixed signals provide even more reasoning for companies to take a wait-and-see approach to their summer business strategy,” he said.
*The year-to-date total of 275,218 reflects a downward adjustment of 4,000 related to a correction of previously reported data for the energy sector. The correction is also reflected in the latest industry totals.