Planned Layoffs Hit 13-Month Low in June

July 12, 2012
Computers and transportation industries report more layoffs than any other manufacturing sector the first half of 2012, according to Challenger report.

The number of U.S. employers planning to cut jobs in June dropped to a 13-month low as companies seek to secure skilled workers, global outplacement firm Challenger, Gray & Christmas Inc. reported Thursday.

All major manufacturing sectors that Challenger tracks, including industrial goods, consumer products, aerospace and defense, and computers saw job cuts decline in June.

The number of planned job cuts in June was 9.4% lower than the previous year. U.S.-based employers announced job cuts totaling 37,551 during the month, down 39% from May.

The dip could be related to employers' reluctance to cut staff with skilled talent in short supply, said John Challenger, CEO, Challenger, Gray & Christmas.

"While it does not take long to shrink payrolls, it can take a significant amount of time to rebuild them, particularly as reports of the growing skills gap becomes more widespread," Challenger said.

Through the first six months of 2012, job cuts rose 15% to 283,091, Challenger reported.

In the manufacturing sector, the computer and transportation industries, respectively, have reported the most job cuts in the first half of 2012

The computer industry reported 34,380 job cuts in the first half, a more than tenfold increase from the first six months of 2011. Hewlett-Packard Co. contributed to most of the cuts when the company announced in May it would eliminate 27,000 jobs.

"Overall, 15 industries have seen job cuts increase from a year ago, but we still are not seeing the level of downsizing that might foretell a double-dip recession," Challenger said. "In several of the industries experiencing increased job cuts, the increase has come from one or two large announcements."

In consumer products 64% of the industry's 22,658 job cuts came from two employers. The industry reported a 144% increase over the previous six-month total.

Most U.S. companies will likely hold off on hiring or firing employees for the remainder of the year - at least through the November elections.

But Challenger cautioned that the positive signs don't necessarily signal a downward trend for job-cutting activity. Current economic pressures, including the economic crisis in Europe and weakness in consumer spending continue to threaten future growth, Challenger said.

"The problem is that the Fed is running out of fixes in its toolbox and it is unlikely that any type of stimulus spending is going to originate from Washington," Challenger said. "Without the government propping up the economy, the responsibility falls to consumers and businesses and there is simply no evidence that either is ready to go on a recovery-sustaining spending spree.

"Continued weakness in the recovery will further delay hiring, which will, in turn, further delay the full recovery. Whether or not we see an increase in job cuts depends on the length and severity of the recovery's slowdown. Countries in the Euro zone are taking steps to shore up their economies, but they definitely are not out of the woods. The shock of an economic collapse in Europe would certainly ripple through our economy and could send us spiraling back toward recession."

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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