U.S.-based employers announced plans to cut 60,587 jobs from their payrolls in March, down 21% from the 76,835 cuts announced in February. Despite the decline, last month’s cuts in the Automotive and Energy sectors added to the highest quarterly total of the last 14 quarters, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
First quarter cuts totaled 190,410, 10.3% higher than the 172,601 cuts announced in the final quarter of 2018 and 35.6% higher than the 140,379 announced in the same quarter last year. It is the highest quarterly total since Q3 2015, when 205,759 cuts were announced. It is also the highest first quarter total since 2009, when 562,510 cuts were recorded.
“Companies appear to be streamlining and updating their processes, and workforce reductions are increasingly becoming a part of these decisions. Consumer behavior and advances in technology are driving many of these cuts,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.
“Another major driver of the uptick in job cuts is economic uncertainty and fears of an upcoming downturn. Companies are reacting to market conditions as much as consumer demand,” he added.
March job cuts were led by the Automotive sector, which announced 8,838 cuts. So far this year, automotive manufacturers and suppliers have cut 15,887 jobs. Energy companies followed with 8,149 planned cuts last month, for a total of 10,548 this year.
“Both Auto and Energy companies are pivoting in response to advances in technology and consumer demand for more efficiency. Companies in these sectors are attempting to attract talent who can compete with tech companies, like Apple and Tesla, which are beginning to compete in this space,” said Challenger.
“At the same time, the big automakers are adding positions. In order to move talent through the pipeline, we’ve seen a number of companies offer buyouts or voluntary severance packages to thousands of their workers. Many of them are offered to workers who are 55 and older and who have been with the company for a number of years. It’s clear that companies are attempting to make way for new talent. While necessary, companies should consider retaining their seasoned talent for their experience and institutional knowledge as they make this transition,” he added.
Financial firms made the third-highest number of cuts in March, with 4,884. The year-to-date total in that sector is 9,570, 239% higher than the 2,823 cuts announced in the industry through March 2018.
Retailers continue to lead all sectors in job cuts this year with 46,061, 4,860 of which were announced in March. That is 18.5% lower than the 56,526 Retail cuts announced in the first quarter of 2018. According to Challenger tracking, Retailers have announced plans to shutter 4,048 stores so far this year.
“While Retail is by far responsible for the highest number of cuts recently, the sector is also constantly hiring. In fact, The Home Depot announced it would hire 80,000 workers for the spring and summer months,” said Challenger.
The majority of cuts this year are due to “restructuring;” 49,868 cuts have been announced due to this reason. Bankruptcy claimed another 40,218 this year, a 33.8% increase over the first quarter of last year. Another 27,380 cuts were due to plant, unit, or store closings.
“Several indications, such as the number of companies filing for bankruptcy or closing operations, suggest we’re heading for a downturn. The recent proposal to close the southern border adds to the uncertainty and may contribute to more cuts as companies try to adapt,” said Challenger.
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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).
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