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Job Cuts Fall to 15-Month Low in June

Unemployment may be leveling off

July 2, 2009
Pink slips were still going out last month, but at a slower rate than we’ve seen in more than a year.

Announced job cuts fell to a 15-month low of 74,393 in June, according to global outplacement consultancy Challenger, Gray & Christmas, Inc., suggesting that the worst of the economic turmoil may have passed.

June job cuts were 33 percent lower than the 111,182 firings announced in May and marked the first time since last September that the monthly tally was under 100,000.

The June job-cut total was the lowest since 53,579 job cuts were announced in March 2008, and nine percent lower than the same month a year ago, when 81,755 announced job cuts were recorded.

The last year-over-year decline occurred in February 2008, when the 72,091 announced layoffs were 14 percent lower than the 84,014 cuts announced the previous February.

Job cuts have now declined each month since reaching a seven-year high of 241,749 in January. The second-quarter total of 318,165 job cuts is 45 percent below the 578,510 cuts announced in the first quarter.

Despite the decline, the 896,675 layoffs announced during the first six months of 2009 is the largest January-June total since Challenger job-cut tracking began in 1989.

"We typically see a decline in job cuts in the second quarter," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. "In fact, it is the slowest job-cut quarter, historically. However, this recent drop-off may be indicative of an overall downward trend in layoff activity. We will probably see job-cut activity increase from current levels in the months ahead, but job cuts in the second half of the year are likely to be lower than the first-half and may even come in below the second quarter of 2008, when 748,045 cuts were announced."

Unlike 2008, when job cuts were dominated by the financial-services industry, the largest portion of job cuts has come from the government and automotive sectors. Combined, the two sectors have announced 221,798 job cuts, or about one in every four cuts.

Another 7,882 job cuts were recorded for the auto industry in June, bringing the six-month total to an industry-leading 119,496. The government sector added 19,438 job cuts last month. This sector has now announced 102,302 job cuts since January, more than doubling last year’s six-month total of 46,784.

Meanwhile, the financial sector, which was the leading job-cut industry in 2008, has announced 40,911 firings through the first half of 2009. That is down 52 percent from the same period a year ago, when financial firms announced 85,258 job cuts.

"The government and non-profit sector will continue to be a source of heavy job cutting for the remainder of the year," said Challenger. "States and local municipalities are running significant budget deficits and have no option but to keep making cutbacks in services and personnel. Even after an injection of federal stimulus money, many states will still be in the red.”

Meanwhile, Challenger notes that job cuts in financial services, industrial-goods manufacturing, computer and consumer products have slowed considerably and may continue to do so with the economy stabilized. But he says it could be several more months before we see hiring make a comeback, although it appears that many employers have reached the staffing levels they need to make it through the recession.

This year alone, job cuts in the retail sector have declined 88 percent from 76,548 in the first quarter to 9,150 in the second quarter. Telecommunications has also seen a dramatic decline, dropping 90 percent in the second quarter to 1,876, after reaching 18,972 in the first three months of the year.

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