Planned Layoffs Virtually Unchanged in February

The number of planned layoffs remained virtually unchanged in February, as U.S. employers announced workforce reductions totaling 51,728 during the month, down slightly (3.3 percent) from the 53,486 layoffs recorded in January, according to the latest job-cut report released Thursday by global outplacement firm Challenger, Gray & Christmas, Inc.

Last month’s total was up 2.0 percent from a year ago, when employers announced 50,702 job cuts in February. Overall, the pace of downsizing is up 18 percent over last year, with 105,214 job cuts announced through the first two months, compared to 89,221 during the same period in 2011.

What may stand out most about 2012 job cuts so far is not the number of layoffs, but the source. Last year, job cuts in the first two months were dominated by the government sector; a trend that would continue throughout 2011. Through the first two months of 2012, job cuts have been concentrated in consumer products and transportation.

Consumer products firms lead all others in job cuts, having announced 16,320 this year, up 351 percent from the 3,621 announced at this point a year ago. The second-ranked transportation sector has seen job cuts increase 616 percent from 2,211 a year ago to 15,835 in 2012. Together, these two sectors account for 32,155 job cuts or 30.6 percent of the year-to-date total.

This is a significant change from a year ago, when the top job-cutting sector was government, which announced 22,830 planned layoffs; more than a quarter (26 percent) of the 89,221 job cuts recorded in the first two months of the year. This year, job cuts in the government sector are down 84 percent this year to 3,654.

“It is too soon to say that the government sector is out of the woods when it comes to layoffs. However, recent gains in employment across many states are undoubtedly helping to boost payroll tax revenue. Furthermore, many states and local municipalities have already cut to the bone and may have little room for additional cuts. The biggest threat for increased government job cuts remains the federal government, which is still under pressure to cut deficits and bring spending under control,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“While, the decline in government job cuts is certainly promising, surging job cuts in consumer products and transportation are particularly worrisome. These are strong indicators of economic health, especially as it relates to consumer spending. Both sectors are undoubtedly feeling the impact of rising fuel prices as heavy users of fuel, but also from their dependency on consumers, who are being forced to spend more on gasoline and less on the products and services provided by these firms,” said Challenger.