Planned job cuts by U.S.-based employers surged 41% in October to 47,724, as a spate of layoff announcements in the wake of weak quarterly earnings reports helped push downsizing activity to its highest level in five months, according to the report on monthly job cuts released by outplacement consultancy Challenger, Gray & Christmas Inc.
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At the same time, the latest report from the Bureau of Labor Statistic shows that the U.S. economy added 171,000 net new jobs in October.
The October job cuts surge follows a relatively mild September, during which employers announced 33,816 job cuts, which was the second lowest monthly total in the last 22 months.
October was the highest job-cut month since May, when 61,887 planned layoffs were announced. It was up 12% from the same month a year ago, when employers announced plans to trim payrolls by 42,759 workers.
Despite last month's sharp increase, layoffs for the year are still well below last year's pace. Through 10 months, employers announced 433,725 job cuts, 17% fewer than the 521,823 cuts announced between January and October 2011.
The automotive sector led the surge in October job cuts, announcing plans to shed 11,615 workers. However, the bulk of last month's automotive job cuts were by the Ford Motor Co., which announced a plant closing in Belgium that will affect 9,500 workers. Another 1,400 Ford workers in the United Kingdom are also being laid off. Both workforce reductions were the direct result of the ongoing European economic crisis.
"While the Ford job cuts are not impacting American workers, they indicate just how vulnerable companies in the U.S. are to the situation in Europe. Several other companies, including Dow Chemical, Colgate- Palmolive, and DuPont attributed poor quarterly earnings to weak demand in Europe and other global markets," said John A. Challenger, CEO of Challenger, Gray & Christmas.
"The final three months of the year tend to see heavier downsizing activity as companies make year-end adjustments to meet earnings goals and to prepare for the new year. Certainly, the deluge of weak third-quarter earnings reports that resulted from declining sales here and abroad does not bode well for workers as 2013 approaches," he added.
New Jobs Growing
The U.S. economy is snapping out of its summer funk and picking up the pace, according to Cassidy Turley chief economist Kevin Thorpe.
"The October employment numbers (assuming they hold true after revisions) were yet another sign that, regardless of intensifying politics, the nation's economy is again growing fast enough to generate a reasonably healthy number of new jobs," Thorpe said. "The principal threat to the economy remains fiscal policy concerns, but interestingly enough, consumers are spending as if they no longer seem to care."
Over the last three months, growth in retail sales is on par with the strong rates in the first three months of the year, and this time we can't attribute the better numbers to unseasonably warm weather, Thorpe said. Demand for cars, homes, electronics, furniture, clothing - it's all generally trending upward as we enter the holiday season. The same uptrend is evident in the manufacturing sector. New factory orders have been rising steadily since August.
Retailers Added 130,000 Jobs
While several large retailers have announced large-scale holiday hiring plans, employment gains in the retail sector last month were virtually unchanged from a year ago, according to Challenger, Gray & Christmas.
The 130,100 retail job gains last month were only slightly more than the 128,900 retail jobs added in October 2011. The first month of holiday hiring both this year and last were down significantly from the 149,800 retail jobs created in October 2010.
While 2011 started slowly, retailers added another 531,300 workers in November and December for a total of 660,200 seasonal employment gains, the highest level since 2007. In 2008 - the worst holiday-hiring season in 22 years - retailers added only 38,600 seasonal workers in October and only 324,000 total workers during entire holiday season of October through December.
"November will give us the best indication of how 2012 stacks up when it comes to holiday hiring. It is likely that a lot more of the holiday hiring plans announced by national retailers, including J.C. Penney, Kohl's, Best Buy and Macy's, will show up in the November hiring figures," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
"It remains to be seen how the aftermath of Hurricane Sandy could impact retail hiring on the East Coast. These were highly populated areas that were affected. There is a good chance that many people in the region will still be trying to rebuild their lives when the peak holiday shopping season starts in a few weeks. Buying Christmas presents could fall pretty low on the list of priorities, which may mean that retailers in this area - many of whom are also facing significant damage - may hold off on planned holiday hiring," Challenger said.
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