The pace of downsizing remained relatively flat in October, as the nation’s employers announced plans to cut 45,730 jobs from their payrolls during the month. That was up 13.5 percent from 40,289 job cuts recorded in September, according to the latest report on monthly job cuts released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The October job-cut total was down 4.2 percent from the same month a year ago, when 47,724 planned cuts were announced. This marks the first time in five months that the job-cut total was lower than the comparable period a year ago.
Employers have now announced 433,114 job cuts since January 1. That is virtually unchanged (down 0.14 percent) from the 433,725 job cuts announced through ten months of 2012. At the current pace, annual job cuts are positioned to come in slightly below the 2012 year-end total of 523,362, which was the lowest 12-month figure since 1997, when 434,350 job cuts were tracked by Challenger.
The pharmaceutical industry saw the heaviest job cutting in October, with 10,585 job cuts announced.
That is the largest one-month job-cut total for this sector since July 2011, when 13,493 job cuts were announced. In both October and July 2011, the majority of the announced job cuts came from pharmaceutical giant Merck, which, like many other pharmaceutical companies, has had to adjust research focus and workforce levels toward drugs with the highest potential to win regulatory approval and achieve successful sales levels.
Second to the pharmaceutical industry in October job cuts was the financial sector, which announced 8,717 job cuts during the month. That is the highest monthly total for the sector since February (21,724). For the year, the financial sector has seen the heaviest downsizing activity, by a wide margin. Since January 1, these firms have announced 57,591 job cuts, nearly 10,000 more than the second-ranked health care sector, which has announced layoffs totaling 47,902 so far this year.
“The banking sector is cutting workforce levels as a direct result of an improving economy. Many banks, including Bank of America, which announced 4,200 job cuts in October, are slashing positions in their mortgage department as the number of troubled mortgages and foreclosures dwindles.
Furthermore, improvements in the economy are also pushing interest rates back up, which is curbing demand for refinancing,” noted John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“Meanwhile, the health care sector continues to experience heavy job cutting in the face of shrinking Medicare reimbursements under the Affordable Care Act as well as federal spending cutbacks imposed by sequestration. Nearly half of the 6,817 health care job cuts announced in October were attributed to ‘cost cutting’ or directly to health reform,” said Challenger.
“The increased cuts we have seen recently are probably just the beginning. If there is one thing, both political parties agree on, it is the need to somehow slow the sky-rocketing cost of health care. While they disagree on how to achieve that goal, the fact is that, regardless of what path is taken, lowering health care costs is likely to force health care providers to reduce their headcounts.
“The same can be said for the spending cuts throughout the federal government. The need to cut spending and reduce the deficit will ultimately lead to increased job cutting both within and outside of the government. Not only will government agencies need to trim payrolls, but the hundreds of private-sector companies that sell products and services to the government will also be forced to reduce their workforce levels as the revenue stream from this customer slows,” said Challenger.
“In addition to increasing the potential for private-sector job cuts, government policies, or the lack thereof, are also inhibiting hiring. While the recent federal shutdown is unlikely to result in job cuts, the fact that we had a shutdown and the very temporary solution to that shutdown is directly impacting consumer and employer confidence. The resulting uncertainty, in turn, is causing many employers to hold off on any significant, long-term hiring plans,” he noted.
