Layoffs Decline Indicates Business Optimism

Overall, U.S. companies are downsizing less and hiring more as employers confidence regarding the economy rises, global outplacement firm Challenger, Gray & Christmas Inc. said May 4.

Job cuts declined 12% in April from the previous month. Employers reported 5% fewer job cuts than the year-earlier month. That is the lowest monthly total of the year and the third lowest over the last 16 months.

But through the first four months of the year, manufacturing-related sectors reported increased layoffs, including aerospace and defense where job cuts surged more than 200% to 11,792 compared with the same period in 2010.

The aerospace and defense cuts likely stem from federal defense spending cutbacks, says Challenger, Gray & Christmas spokesman James Pedderson. Federal spending was down 7.9%, the largest decline in more than a decade, according to the latest government report on the nation's gross domestic product.

The industrial goods sector reported 7,499 job cuts through April, up from 6,492 during the first four months of 2010.

Most of layoff decreases came from the retail and government/nonprofit sectors, according to the report.

"It is important to realize that our hiring figures represent just a fraction of the job creation that is actually occurring, since most employers do not publicly announce hiring intentions," said John Challenger, chief executive officer of Challenger, Gray & Christmas. "Of course, the weak link in the job market right now is the government sector, which continues to shed employees at a heavy rate."

Federal cutbacks are likely behind increased job cuts in the aerospace and defense sector, where layoffs surged more than 200 percent from 3,838 in the first four months of 2010 to 11,792 this year.

Meanwhile, hiring is on the rise. Employers announced plans to add 172,590 workers during the first four months of the year, a 149% increase over the same period last year.

The McDonald's restaurant chain contributed to a large portion of the gains with a plan to add 50,000 employees.