Increased Layoffs in Q1 Led by Retail, Government Woes

John Challenger of Challenger, Gray & Christmas

The nation’s employers reported job cuts totaling 49,255 in March, a decline of 11 percent from the 55,356 cuts announced in February, according to the latest report on downsizing activity released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.  Despite the decline, quarterly job cuts reached their highest level since 2011.

March job cuts were 30 percent higher than a year ago, when employers announced plans to shed 37,880 workers from their payrolls.  This marks the second consecutive month and the fourth time in the last six months that the job-cut total was higher than the year-ago figure.

Employers have now announced 145,041 job cuts through the first three months of 2013.  That 5.6 percent higher than the previous quarter’s 137,361 job cuts and 1.4 percent higher than the 143,094 job cuts announced in the first quarter of 2012.  The first-quarter total is, in fact, the highest quarterly tally since 233,258 job cuts were tracked in the third quarter of 2011.

Retailers led March downsizing with 16,445 reported job cuts, up from 2,279 in February.  For the year, retailers have reported 25,400 cuts.  That ranks second only to the financial sector, where 3,517 March job cuts brought the year-to-date total to 33,819, which more than triples the 11,092 first-quarter job cuts announced a year ago.

“While consumer spending is up in 2013, many retailers have been fighting for their lives since the end of the recession.  We could see more retail job cuts in the months ahead as many traditional retailers struggle to find their footing in a more segmented and internet-driven retail environment.  Best Buy, JC Penney, Sears, Kmart and Blockbuster have each been forced to shed workers in recent months or, as in the case of Blockbuster, shut down entirely,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Another trend that is expected to result in more job cuts is government cost cutting.  Sequestration has not yet led to a significant surge in government job cuts, which totaled 1,448 in March.  However, the self-imposed cost-cutting measures that went into effect March 1 are already taking a toll on the aerospace and defense industry, which last month announced job cuts totaling 3,921, more than one-quarter of which were the direct result of a sequester-related lost government contract.  For the year, job cuts in the sector total 9,766, up 26 percent from a year ago.

“On the hiring front, we saw a significant drop from the first two months of the year, when both Home Depot and Lowe’s announced plans to add thousands of seasonal workers to their stores nationwide.  It is important to remember, however, that most employers do not formally announce hiring plans.  There are definitely more hiring opportunities than our numbers suggest.  In fact, the Bureau of Labor Statistics’ latest job openings and labor turnover survey shows that there were 3.7 million job openings at the end of January,” said Challenger.

“One sector that will continue to see employment gains in the months ahead is business services, particularly in the temporary employment arena.  Business is picking up, but many employers remain wary about adding full-time permanent workers, so staffing agencies become the go-to source for recruits.  As the economy continues to improve, these temporary workers are likely to transition into full-time employees,” said Challenger.