August Job Cuts Down 12.5% From July; Fewest Since December 2010

Employers announced plans to shed 32,239 workers from their payrolls in August. It was the fewest number of monthly job cuts by US-based firms since December 2010, when layoffs totaled 32,004, according to the latest job cuts report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

August job cuts were down 12.5 percent from a July total of 36,855, making it the third consecutive decline in monthly job cuts. Last month was 37 percent lower than August 2011, when employers announced plans to eliminate 51,114 positions from their ranks.

Since January 1, employers have announced 352,185 planned job cuts. That is nearly unchanged from a year ago; down three percent from the 2011 8-month total of 363,334. Fewer job cuts over the last three months have effectively reversed a trend that saw increased downsizing through the first half of 2012. At the midway point of the year, 2012 job cuts were 15 percent higher than at the same point in 2011.
The three-month decline in the pace of downsizing may be further evidence of an improving economy or it may simply be a summer lull in job-cut activity. The slowdown in activity many businesses experience during the summer months also appears to impact job cuts. Over the previous 10 years, the monthly average for June, July and August was consistently lower than the monthly average for the entire year, with the exception of 2005 and 2011.

August job cuts were led by the telecommunications sector, where employers announced 4,584 job cuts. Most of these cuts (4,000 out of the total) were the anticipated cuts resulting from Google’s acquisition of Motorola Mobility. Year-to-date, telecom firms have announced 18,987 job cuts, which is up 146 percent from 7,715 at this point last year.

For the year, computer firms rank as the top job cutters, having announced 37,670 job cuts since January 1, including 2,664 in July. The year-to-date total for this sector is 233 percent higher than the 11,297 job cuts announced by these employers through eight months of 2011.

“Job cuts slowed significantly over the summer, but it is too early to determine whether this is a trend. There have been other signs of economic improvement, including an uptick in home prices and strong automobile sales. However, there seem to be just as many reports showing continued trouble, such as three months of contraction in manufacturing,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“If international job-cut activity is any indication, we may see a surge in downsizing in the final months of 2012 and into 2013. We do not officially track job cuts announced by foreign companies, except those reporting a specific number of layoffs impacting U.S. workers. However, it has been hard to miss some of the recent figures coming from overseas companies, including 10,000 job cuts recently announced by Sony,” said Challenger.

In addition to Sony, fellow consumer electronics firm Sharp Corp. announced plans last month to cut 5,000 workers in the current fiscal year. Research In Motion, the Canadian maker of Blackberry smart phones, also announced 5,000 job cuts in August. Australian airline Quantas Air plans to cut 2,800 workers. Deutsche Bank announced 1,500 job cuts.
“The US does not exist in a bubble. The ongoing crisis in Europe and weak economies around the globe will undoubtedly take a toll on the economy. There is a chance workers might be spared from a renewal of large-scale job cuts, but the situation beyond our borders certainly will not inspire companies to start adding workers en masse,” Challenger concluded.