Announced job cuts fell to the lowest level of the year in December as U.S.-based employers reported plans to reduce payrolls by 30,623 during the month. That was down 32 percent from a November total of 45,314. For the year, job cuts were down about 3.0 percent from 2012, according to the latest report on monthly job cuts released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The December total was six percent lower than the 32,556 job cuts announced in the same month a year earlier, marking the third consecutive year-over-year decline. Last month was not only the lowest job-cut month in 2013; it was, in fact, the lowest job-cut month in more than 13 years. The last time employers announced fewer job cuts was June, 2000, when 17,241 planned layoffs were recorded.
Overall, employers announced a total of 509,051 planned job cuts in 2013, down 3.0 percent from 523,362 in 2012. It is the lowest annual job-cut total since 434,350 cuts were announced in 1997. The fourth quarter of the year saw a slight increase in October job cuts, followed by consecutive declines in monthly job cuts to close out 2013. In all, 121,667 job cuts were announced over the final three months of the year, which was 5.3 percent lower than the previous quarter (128,452) and 11 percent lower than the fourth quarter of 2012 (137,361).
“Employers seem less and less inclined to make dramatic staffing decisions in the final month of the year. We have had several years, when it was among the largest job-cut months of the year, if not the largest. Over the last five years, however, December job cuts have come in well below the annual average. It was the lowest job-cut total this year and the second lowest a year ago. It could be the spirit of the holiday season that is prompting employers to hold off on announcing layoff plans, but it is more likely to be the result of increased confidence heading into each new year. The recovery has been slow, but every year since the recession has been better than the previous one,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
While overall job cuts were 3.0 percent lower than a year ago, four of the top five job-cutting industries experienced significant increases in downsizing last year. The financial sector led all other industries with 60,962 job cuts, up 49 percent from 41,008 in 2012. The second-ranked health care sector announced 52,638 job cuts in 2013, which is 45 percent more than the 36,212 a year earlier. Job cuts announced within the industrial goods nearly doubled from 26,103 in 2012 to 51,864.
Due to the heavy downsizing in the financial sector, New York-based firms announced the most job cuts in 2013 with 82,952. California ranked a distant second with 59,535. Illinois-based companies cut 43,431 jobs last year, up 66 percent from 2012, when employers in the state announced layoff plans impacting 26,163 workers both inside and beyond its borders.
“The heavy job-cutting industries were impacted by several factors in 2013, most of which were unrelated to the health of the economic recovery. In fact, in the case of the financial sector, the ongoing recovery was, ironically, a contributing factor to increased layoffs, as these institutions shed the thousands of extra workers brought on to handle foreclosures as well as the refinancing of troubled mortgages. As the economy improved, the number of foreclosures and troubled mortgages decline. At the same time, mortgage rates and home prices increased, which lowered demand for mortgage bankers,” noted Challenger.
“Likewise, job cuts in the health care sector were not driven by lower demand. Indeed, demand for health care is on the rise. However, cuts in Medicare reimbursements and Medicaid funding forced hospitals and other health care providers to adjust their staffing levels, as that source of income declines.”
“Despite the rise in job cuts, health care workers remain highly sought-after. In fact, the Bureau of Labor Statistics recently noted that health care will account for about one in every three jobs created over the next ten years,” he added.
Occupations in the health care sector that are expected to see strong hiring include physician’s assistants; nurses, particularly those in specialty areas, such as oncology; physical therapists; and medical technicians. There will also be high demand for researchers, engineers, designers, chemists and other high-skill areas in bio-technology, medical equipment manufacturing and pharmaceuticals, according to Challenger.
Another area poised for strong growth in 2014 is technology. While the computer industry saw the fifth highest number of job cuts last year, the pace of downsizing in the sector was actually down 24 percent from 2012. The industry ranked third in terms of hiring announcements, with firms announcing plans to add more than 26,000 workers.
“Our hiring total represents a tiny fraction of the actual job creation, since most employers do not formally announce hiring plans. Computer science, information technology, electronics manufacturing and telecommunications will continue to be strong job generators in the 2014 economy. New companies are forming and existing companies are expanding products and services related to Big Data, cloud computing, and security, particularly in the wake of the massive security breach at Target,” said Challenger.
“The coming year will hopefully see improved conditions for small and medium sized businesses that have struggled so far in this economy. Big businesses, on the other hand, have done rather well, regardless of the industry. Globalization has really driven the growth for multi-national conglomerates. The benefits are trickling down in several ways. These firms require large staffs to conduct market research, product R&D, sales and marketing. They need accountants and administrators and myriad of support staff. Their growth is also benefiting ancillary industries, such as management consulting, staffing, information technology, etc. These employers will continue to seek new workers in 2014 and beyond,” he continued.
“One area that may be off many job seekers’ radar is anything related to skilled trades, such as electrical maintenance, plumbing, carpentry, masonry, automotive maintenance, etc. It may be difficult for many to enter these careers from less technical areas, but for students and other young people thinking about future job opportunities, these fields will be fruitful in the coming years, as the existing workforce continues to age and retire. These are jobs that will always be in demand and that cannot be outsourced overseas,” Challenger concluded.Download Resource