Announced U.S. Job Cuts Fall 32% From Year Ago, Challenger Says
Challenger, Gray & Christmas CEO John A. Challenger
Challenger, Gray & Christmas, Inc. via Bloomberg
Challenger, Gray & Christmas chief executive officer John A. Challenger said “Job cuts are the lowest they have been in a decade.”
Challenger, Gray & Christmas chief executive officer John A. Challenger said “Job cuts are the lowest they have been in a decade.” Source: Challenger, Gray & Christmas, Inc. via Bloomberg
Job cuts announced by U.S. employers fell in October from a year earlier, signaling that a lack of hiring rather than an increase in firings is restraining the labor market.
Planned firings dropped 32 percent to 37,986 last month from 55,679 in October 2009, according to Chicago-based Challenger, Gray & Christmas Inc.
While companies are cutting fewer workers from payrolls, jobs aren’t being added fast enough to further boost consumer spending, which accounts for about 70 percent of the economy. Federal Reserve policy makers, concerned demand isn’t strong enough to reduce a jobless rate near 10 percent, may announce today another round of monetary policy easing.
“Job cuts are the lowest they have been in a decade,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Unfortunately, the lack of spending by consumers and businesses is stunting demand for new workers.”
Compared with September, job-cut announcements rose 2.2 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.
Entertainment and leisure firms led the October job cuts with 5,059 announced reductions, the largest in that industry since July 2008, according to Challenger. Government and non- profit agencies had the next-largest number of cuts, with 4,749.
New York led all states with 7,363 announced job cuts, followed by New Jersey, with 5,410.
Hiring Plans
Today’s report also showed that employers announced plans in October to hire 124,766 workers, up from 123,076 the prior month. Retail and transportation companies led the gains, planning to add 66,000 and 50,300 positions, respectively.
Toys ‘R’ Us Inc., the world’s biggest toy retailer, is among companies announcing hiring plans in recent months to prepare for the holiday shopping season. Toys ‘R’ Us said in September it will look to hire about 45,000 employees to cope with holiday demand.
Cedar Rapids, Iowa-based Rockwell Collins Inc., a maker of cockpit instruments and radios, last week said it will add 800 people, boosting staff by 4 percent during the next 12 months. Ford Motor Co., the second-largest U.S. automaker, said it will spend $850 million and add 1,200 jobs in Michigan by 2013 as sales rebound.
A report from the Labor Department later this week may show companies added 80,000 jobs in October, according to the median forecast in a Bloomberg News survey of economists. The jobless rate probably held at 9.6 percent, the survey showed.
Federal Reserve
Investors are anticipating Fed policy makers will restart a program to purchase securities to spur growth, reduce unemployment and increase inflation, according to 53 of 56 economists surveyed last week by Bloomberg. A majority said the Fed will pledge to buy $500 billion or more. Fed Chairman Ben S. Bernanke said on Aug. 27 that the central bank “will do all it can” to sustain the recovery.
Challenger’s data do not always correlate with figures on payrolls or first-time jobless claims as reported by the government. Many job cuts are carried out through attrition or early retirement. Some employees whose jobs are eliminated find work elsewhere in their companies and many announced staff reductions never take place because business improves. The totals also include foreign affiliates.
To contact the reporter on this story: Alex Kowalski in Washington at Akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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