2016 December Job Cut Report: 33,627 Rounds Out Year of Low Job Cuts
The pace of downsizing ticked up slightly to close out 2016, as U.S.-based employers announced plans to shed 33,627 jobs from payrolls in December, according to the report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
December job cuts were up 25 percent from November’s 26,936, the lowest monthly total of 2016. The December total was well below the 43,910 job cuts averaged monthly throughout the year.
Last month’s tally was 42 percent higher than the same month a year ago, when employers announced planned layoffs totaling 23,622, which was not only the lowest monthly total of 2015, but the lowest monthly total in more than 15 years.
December marked the third consecutive month in which job cuts remained significantly below the annual average. In all, just 91,303 planned job cuts were reported in the final quarter of 2016. That is the lowest quarterly total since Q2 of 2000, when employers announced only 81,568 planned layoffs.
Employers announced a total of 526,915 job cuts in 2016. That is 12 percent fewer than the 598,510 cuts tracked in 2015. The 2016 total sits below the 539,581 annual job cuts averaged since 2010, which marked the first year of recovery in the wake of the Great Recession.
The heaviest job cuts in 2016 occurred in the energy sector, which announced 107,714 layoffs during the year. That was up 14 percent from 2015, when these firms cut 94,409 job cuts.
Most of the energy cuts were announced in the first half of 2016, as the industry continued to suffer from historically low oil prices. Between January and June, layoffs in the sector totaled 77,211.
As prices started to recover in the second half of the year, job cuts declined sharply. Additionally, of the 30,503 energy cuts in the second half of 2016, about 20 percent came from companies in the renewable energy industry, including wind and solar. In contrast, cuts from renewable energy firms accounted for just under 11 percent of the 77,211 energy sector layoffs announced in the first half of the year.
“Oil prices are back on the rise. The new administration poised to take over the White House in January could further benefit the industry by relaxing regulations and drilling restrictions. Oil companies may once again start to expand in 2017. Ironically, the only obstacle in their way may be a shortage of skilled workers,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“When the last boom got underway, oil firms had the luxury of building their workforces amid high unemployment across the nation. Before the most recent downturn, drilling firms were already struggling to find workers. Now, they will have to rebuild their workforces at a time when unemployment nationwide is below 5.0 percent. In many areas, the rate is much lower. In fact, there are nearly 50 metropolitan areas with unemployment rates of 3.0 percent or lower,” said Challenger.
Job cuts were also up in the computer industry in 2016. These firms announced 66,821 job cuts during the year, 7.4 percent more than in 2015 (62,191).
Rounding out the top five job-cutting industries of the year were retail (59,324), industrial goods (33,435), and financial (22,015), each of which saw annual job cuts decline from the previous year.
“Last year appeared to be an adjustment year for many big tech firms. Long-time hardware makers, including IBM and Hewlett-Packard, are undergoing multi-year transformations that will ultimately shift their business away from hardware toward services. Others, including Microsoft, Dell and Intel, are shifting toward mobile while, at the same time, attempting to become more agile,” said Challenger.
“It is hard to say how the tech sector will do under the new administration. Many rely on offshoring as well as the employment of foreign talent immigrating to the U.S. Both of those business practices are likely to come under threat in the coming year. However, the new administration’s pro-business policies may ultimately favor these firms and many others. Only time will tell,” Challenger concluded.