Job Cuts Down 13% From 2010

Posted November 30, 2011 by

The number of planned layoffs announced in November remained virtually unchanged from the previous month, as US-based employers reported job cuts totaling 42,474, down 0.7 percent from 42,759 in October, according to the latest report on downsizing activity from global outplacement firm Challenger, Gray & Christmas, Inc.

November job cuts were down 13 percent from the same month a year ago when employers announced plans to cut 48,711 jobs from their payrolls. November marks the second consecutive month of lower job cuts after surging to a 28-month high of 115,730 in September.

With one month remaining in 2011, job cuts for the year total 564,297, officially surpassing the 2010 year-end total of 529,973. The 11-month total is 13 percent higher than the 497,969 job cuts announced over the same period a year ago.

November job cuts were once again dominated by government sector job-cut announcements, which totaled 18,508 or 44 percent of all job cuts during the month. It is the eighth time this year that this sector led all others in monthly job cuts. For the year, government agencies have now announced 180,881 job cuts, 30 percent more than the 138,979 job cuts announced by these employers through November 2010.

Of the 18,508 government job cuts announced last month, 13,500 were the result of civilian workforce cuts made by the United States Air Force. This marks the third consecutive month in which significant civilian and/or military personnel cuts have been announced by departments of the U.S. Armed Forces.

John Challenger of Challenger, Gray & Christmas

John Challenger of Challenger, Gray & Christmas

“Even if Congress finds a way to delay the automatic military spending cuts triggered by the failure of the deficit reduction super committee, there is still immense pressure to cut costs. The drawdowns in Afghanistan and Iraq are likely to result in further personnel reductions,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“Over the past six months, we definitely have seen a shift away from the heavy government job cuts at the state and local level toward increased job cuts at the federal level. The worst may be yet to come, as cutbacks spread from the military to every other agency in Washington. They will all be targets for cost cutting. The United States Post Office alone could see workforce reductions affecting 200,000 employees,” he added.

According to Challenger, the other sector still at risk for heavy downsizing activity is the financial services industry. Financial firms announced just 1,681 job cuts in November, bringing the year-to-date total for the sector to 56,191. That is up 162 percent from 21,430 financial cuts by this point a year ago.

“Job cuts in the financial sector are still well below the recession high of 260,110, which was the year-end total in 2008. However, even as other sectors begin to enjoy the fruits of the recovery, these firms remain on very thin ice. The ongoing threat from the European financial looms large over Wall Street, while retail banks continue to struggle in the wake of the housing market collapse,” said Challenger.

After the second-ranked financial sector, retail is the next largest job-cutting sector this year, with 48,338 announced layoffs to date. That is up from 33,814 a year ago. These employers announced 2,285 job cuts in November, down from 4,264 the previous month.

“The end of the year is typically when we see much lower retail downsizing, since this is when these businesses are actually hiring in droves, as they bulk up their staffs for the holiday season. We are expecting holiday retail hiring to be about the same as a year ago, when employment in the sector grew by about 627,000. While October employment gains were flat compared to a year ago, we could see increased hiring activity in late November and early December due to stronger-than-expected sales on both Black Friday and Cyber Monday, ” said Challenger.

According to the National Retail Federation, brick-and-mortar retail stores saw a 7 percent increase in Black Friday sales, which hit a record high $11.4 billion. Meanwhile, IBM reported that the average amount of money spent per consumer on Cyber Monday increased a whopping 33 percent.

In October, Challenger tracked hiring plans totaling 159,177, 84 percent of which (or 133,940) were announced by retailers. In November, employers announced plans to add 63,527. Most of these (55,000) were the result of seasonal workers being hired by shipping giant UPS.

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