"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Wednesday, August 3, 2011

Challenger, Gray & Christmas Job Cuts Report

Yep, it's that time of the month again.  The time in which we begin the run-up to Friday's Employment Situation report.  And that means we kick off the festivities with data from Challenger, Gray & Christmas - the outplacement consulting firm - about how many layoffs were announced in a given month.  Not how many happened in a given month (that's a different report), but how many companies have announced in a specific month for the future.
Clear as mud?  Good.
June would have been a disappointing month, except that the analysts don't really care about this report.  They have a tendency to just look at the First Time Jobless Claims and at the Employment Situation itself.  Still, June saw an 11.6% increase in announced layoffs, hitting an anticipated 41,432 total job cuts.  The government and non-profit sector continued to lead the pack with 10,176 announced layoffs (24.6% of the total).  Second place was claimed by the health care and products sector, with 3,729 announced layoffs (9% of the total) - the food sector almost tied for second, announcing 3,500 layoffs (8.4% of the total).  Restructuring took the lead slot in "job cut reasons" at 36.6% of the total, followed by cost-cutting (24.1%) and closing (18%).
Hitting the July report, we see a lot of potential bad news coming down the tubes.  There were 66,414 layoffs announced in July, a 60% increase from June.  38,100 (57%) came from five companies:  Merck, Borders, Cisco Systems, Lockheed Martin, and Boston Scientific.  As a result, Government and nonprofit slipped to third place in the "most announced layoffs" event, announcing only 9389 planned job cuts (or 14% of the total).  Pharmaceuticals led the pack with 13,493 planned layoffs (20.3%), followed closely by retail's 11,245 announced layoffs (16.9%).
Looking at "job cut reasons", closing took the lead with 18,127 (27.3%) of the planned layoffs, followed by cost-cutting at 13,171 (19.8%) planned layoffs, and by competition's 13,000 (19.6%) planned layoffs.
Employment prospects don't look amazingly good for the next few months.

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