Announced U.S. Job Cuts Rose 47% in August From Year Ago, Challenger Says
Employers in the U.S. announced more job cuts in August than a year ago, signaling little progress in the labor market more than two years after the recession ended.
Planned firings climbed 47 percent from August 2010 to 51,114, according to figures released today by Chicago-based Challenger, Gray & Christmas Inc. The announcements were led by reductions at government agencies and in the financial industry.
Job cuts in federal, state and local governments are another restraint on consumer spending that accounts for about 70 percent of the economy. Job growth this month probably fell shy of the gain needed to reduce the unemployment rate, according to a Bloomberg News survey before a Sept. 2 report.
“The private sector once again took a backseat to the government sector, which saw job cuts surge to the second- highest monthly total this year,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “More workforce reductions at the federal level are undoubtedly coming down the road. Congress and the White House are under immense pressure to cut federal budgets.”
Compared with July, job-cut announcements decreased 23 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.
Government agencies led the August firings with 18,426 job- cut announcements, followed by 8,094 in finance and 5,901 in the retail industry.
Bank of America
Bank of America Corp. (BAC), the biggest U.S. lender, will eliminate about 3,500 jobs this quarter to focus “on what we can control” amid financial-market turmoil following the first U.S. credit downgrade in history, Chief Executive Officer Brian T. Moynihan said on Aug. 19. “We owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully.”
The primary reason for announced job cuts was cost-cutting, followed by restructuring and business closings.
Hiring plans picked up in August from a month earlier, the report showed. Employers announced intentions to add 15,201 workers, up from 14,075 in the same month last year and 10,706 in July.
Payrolls climbed by 75,000 workers in August after a 117,000 increase in July, a Labor Department report is projected to show Sept. 2, according to the median forecast of economists surveyed by Bloomberg News. Economists project the unemployment rate will hold at 9.1 percent.
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 job 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.
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