Employers in U.S. Announced 4.8% Fewer Job Cuts in April, Challenger Says

U.S. employers announced fewer job cuts in April than the same month last year, a sign that the labor market is firming.

Planned firings decreased 4.8 percent to 36,490 last month from April 2010, according to a report today from Chicago-based Challenger, Gray & Christmas Inc. Government agencies accounted for the biggest cutbacks by industry.

“The slow pace of downsizing suggests employers remain optimistic about business conditions going forward,” John Challenger, the outplacement company’s chief executive officer, said in a statement. “The weak link in the job market right now is the government sector, which continues to shed employees at a heavy rate.”

Dismissals of state and local public workers may contribute to a slowdown in consumer spending, which accounts for 70 percent of the world’s largest economy. The highest gasoline prices in almost three years may also weigh on household purchases on less-essential items.

Compared with last month, job-cut announcements fell 12 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.

Government and nonprofit organizations announced 10,731 job cuts, compared with 19,099 the previous month, according to Challenger. So far this year, governments have planned 52,660 reductions. Aerospace and defense companies were second last month with 4,514 planned cuts.

California

California led all states with 4,746 announced job cuts, followed by New Jersey with 4,526.

Today’s report also showed that employers announced plans in April to hire 59,648 workers after 10,869 workers the prior month. McDonald’s Corp. accounted for the bulk of the hiring last month after it announced a plan to add 50,000 employees, Challenger said.

Employers in the U.S. hired about 185,000 workers last month, and the unemployment rate held at 8.8 percent, according to the median estimate of economists in a Bloomberg News survey ahead of a May 6 report from the Labor Department.

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: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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