Job Cuts Drop 23% in August to 51,114

United States-based employers announced plans to trim 51,114 workers from the payrolls in August, a 23-percent decline from July, when the number of job cuts hit a 16-month high of 66,414, according to the report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

The August decline follows three consecutive increases in the monthly job-cut total that saw job cuts rise from 36,490 in April to the July peak.  The August total, however, was up 47 percent from a year ago, when employers announced just 34,768 job cuts during the month.

Employers have now announced 363,334 planned layoffs so far this year.  That is only 2.9 percent below a 2010 eight-month job-cut total of 374,121.  The gap between 2010 and 2011 year-to-date job cuts has steadily fallen over the last few months.  In March, year-to-date job cuts were 28 percent behind 2010.  By June, the difference dropped to 17 percent.  Now, less than three percent separates 2011 and 2010.

“July job cuts spiked as a result of a handful of surprisingly large job-cut announcements in the private sector.  It is too soon to tell whether those cuts were an anomoly, but they appeared to be driven by industry- and company-specific trends, as opposed to larger economic ones.  In August, the private sector once again took a backseat to the  government sector, which saw job cuts surge to the second highest monthly total this year,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc.

In August, government agencies announced plans to cut 18,426 workers from their payrolls.  That is nearly double the 9,389 job cuts announced in the sector in July and not far behind the largest government job-cut month of the year: March, when these employers announced 19,099 job cuts.

The government sector has now announced 105,406 job cuts this year.  The next closest sector is retail, which has announced 40,173, including 5,901 in August.

“Unlike previous months, the government job-cut announcements in August were not dominated by state and local agencies.  Instead, the federal level led the way with heavy reductions among the civilian and officer ranks across three branches of the military.  More workforce reductions at the federal level are undoubtedly coming down the road.  Congress and the White House are under immense pressure to cut federal budgets and while the heaviest cuts are due in 2014, we will probably begin seeing some fallout starting this year and into 2012,” said Challenger.

“Furthermore, while state and local agencies saw fewer cuts in August, they are not exactly out of the woods in terms of the budget issues they face.  Many states are still struggling with high unemployment and falling home ownership, which are taking a huge bite out of tax revenues for states and their cities.  And most can expect fewer federal dollars that are needed to prop up their finances,” he said.

“Meanwhile, the private sector is still being hampered by low consumer and business spending.  While we do not see any indication of a sudden resurgence in private-sector job cuts, conditions definitely are not ideal for hiring.  We expect hiring to remain slow through the end of the year and into 2012,” said Challenger.

“That is not to say there is no hiring.  Government surveys of employers show that they are hiring more than four million new workers per month.  It just so happens that employers are losing about four million workers each month to layoffs, terminations, retirements and other voluntary and involuntary departures.  As a result, the net change in employment is not very impressive, but it is important for job seekers to realize that there are opportunities and that they should not give up because of some negative economic reports,” he noted.