Job Cuts Down 5% Year-over-Year; Hiring Way Up
Retail Industry Going through a Jobs Transformation
July 9, 2014
After climbing to a 15-month high in May, planned job cuts announced by U.S.-based employers in June plunged 41% to 31,434, the lowest one-month total so far this year.
Through the first half of 2014, the pace of job cutting is down 5% from a year ago, according to the report by global outplacement consultancy Challenger, Gray & Christmas, Inc.
June job cuts were 20% lower than the same month a year ago, when employers announced 39,372 job cuts. Job cuts during the month dropped sharply from May, when planned layoffs reached 52,961, which was the largest monthly total since February 2013, when 55,356 job cuts were announced.
At the midpoint of 2014, planned job cuts total 246,034, which is 5% fewer than the 258,932 job cuts announced in the first six months of 2013. The year-to-date figure is the second-lowest first-half total since the end of the recession behind 2011, when 245,806 job cuts were announced from January through June.
New Jersey-based employers were hit particularly hard by June layoff activity, accounting for three of the top four job-cut announcements during the month. The closures of two Atlantic City casinos and a Westhampton-based transportation firm resulted in nearly 7,000 job cuts.
The casino closures were the primary reason the entertainment and leisure industry was the top job-cutting sector of the month. In all, these firms announced layoffs totaling 6,005 in June. For the year, employers in the sector have announced 13,700 job cuts, which is up 50% from 9,145 at the same point in 2013.
The heaviest downsizing through the first half of the year occurred in the computer industry, where employers announced plans to cut 30,002 workers from their payrolls. Retailers have also seen heavy job cuts, having announced 26,863 planned layoffs through June.
“The holidays were not kind to several retailers who answered with heavy layoffs in the first quarter. We saw large-scale job-cut announcements from Macy’s, Best Buy, J.C. Penney, and Sears to start out the year. Meanwhile, one of the largest job cuts of the year so far resulted from the bankruptcy of Coldwater Creek, which resulted in 5,500 layoffs,” said John A. Challenger, CEO of Challenger, Gray & Christmas.
“It is also important to understand that not all of these job cuts are related to the economy. Retailers, in particular, are vulnerable to constantly changing trends in fashion, technology, and consumer demand. Retail, in general, continues to grow. But it is an increasingly competitive space where we could see more failures than successes.
“The same could be said for the tech sector. Obviously, this is an area with a huge potential for growth. After all, we are more and more reliant on computers, software and other technology every day. However, change in this industry occurs rapidly, and some of the larger, less nimble companies are sometimes forced to alter their course and that can be painful. This was exemplified by large layoff announcements in the first half of this year by Hewlett-Packard and Intel,” Challenger said.
On the Hiring Side
Total nonfarm payroll employment increased by 288,000 in June, and the unemployment rate declined to 6.1%, the U.S. Bureau of Labor Statistics reported. Job gains were widespread, led by employment growth in professional and business services, retail trade, food services and drinking places, and health care.
Employment in professional and business services rose by 67,000 in June and had averaged 53,000 per month over the prior 12 months. In June, employment within the industry increased in management and technical consulting services (+8,000), architectural and engineering services (+7,000), and computer systems design and related services (+7,000). Employment continued to trend up in temporary help services.
Retail trade employment increased by 40,000 in June. Over the prior 12 months, employment in this industry had grown by an average of 26,000 per month. In June, job growth in the industry occurred in motor vehicle and parts dealers (+12,000), building material and garden supply stores (+8,000), and electronics and appliance stores (+7,000).
Employment in food services and drinking places rose by 33,000 in June and has increased by 314,000 over the past year.
Health care employment increased by 21,000 in June, about in line with the prior 12-month average gain of 18,000 per month. Within health care, employment continued to trend up in ambulatory health care services (+13,000) and in nursing and residential care facilities (+6,000).
Transportation and warehousing employment increased by 17,000 in June. Over the prior 12 months, this industry had added an average of 11,000 jobs per month. In June, couriers and messengers added 6,000 jobs.
Financial activities added 17,000 jobs in June, with a gain of 9,000 in insurance carriers and related activities. Employment in real estate and rental and leasing continued to trend up in June (+9,000).
Financial activities had added an average of 5,000 jobs per month over the prior 12 months.
Manufacturing added 16,000 jobs in June, with all of the increase in durable goods manufacturing.
Within durable goods, employment increased in motor vehicles and parts (+6,000) and in computer and peripheral equipment (+3,000).
Wholesale trade added 15,000 jobs over the month and has added 140,000 jobs over the year.
Employment changed little over the month in other major industries, including mining and logging, construction, information, and government.