The pace of downsizing slowed in July, as U.S.-based employers announced plans to cut 38,845 jobs from their payrolls, down 7.5% from the 41,977 cuts announced in June, according to the latest report on job cuts released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
July marks the second consecutive drop in monthly job cut announcements since May, and is the lowest total since August of last year, when 38,472 job cuts were announced.
Despite the drop, July’s total is 43.2% higher than the 27,122 job cuts announced in the same month last year. So far this year, employers have announced plans to cut 369,832 jobs, a 35.8% increase from the 272,301 cuts announced in the first seven months of last year. It is the highest seven-month total since 2015, when 393,368 cuts were announced.
“The US is enjoying the longest economic expansion in American history and the June jobs report documented a decidedly strong labor market. However, slowing GDP growth in the second quarter, cuts in business investment, and trade tensions led the Federal Reserve to cut its key interest rate by a quarter-point. This move signals trouble on the horizon for the current economic cycle,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.
“Employment tends to be a lagging indicator, as companies often keep hiring up to the edge of a recession. Right now, the labor market is strong. Employees can continue to anticipate moderate wage growth and advantageous employment prospects for the time being,” he added.
Transportation led all sectors in July, with 5,532 announced cuts, followed by Industrial Goods Manufacturing, which announced 4,403 cuts last month. The Energy sector announced 3,737 job cuts in July, while Pharmaceutical companies announced 3,062.
“Manufacturers are being hit, not only by shifting consumer behavior and automation, but by the imposed tariffs. Last month saw over 1,000 cuts announced due to the impact of tariffs,” said Challenger.
In fact, 1,053 cuts were announced due to tariffs, for a total of 1,430 this year.
Retail continues to lead all sectors in 2019 with 55,167 cuts, 1,919 of which occurred last month. That is 27.2% fewer cuts than the 75,763 announced in the same period last year.
Companies in the Industrial Goods sector have announced 52,054 cuts, 529% higher than the 8,276 announced in the first seven months of last year. Meanwhile, Automakers and suppliers announced plans to cut 34,379 jobs through July, up 194% from the 11,696 cuts announced through July of 2018.
Companies in the Technology sector announced 23,281 job cuts through July, up 187% from the 8,124 cuts announced in the same period last year. Energy sector job cuts are up 259% over last year, with 18,264 cuts so far this year compared to 5,088 announced through July 2018.
While job cuts are up in every region, companies located in the Southern United States have seen the largest jump in job cut announcements, as employers in this region have announced 51% more job cuts than through the same period last year: 77,923 compared to 51,497 in 2018. Companies in the Eastern United States had the second-largest percentage increase with 39.9%, as employers in this region announced 108,806 cuts in 2019 compared to 77,795 last year (Table 3).
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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