Layoffs increase in January
Jobs disappeared at an accelerating pace in January as a dismal holiday shopping season brought more gloom to the nation’s battered retail sector, according to a report released Wednesday. And a fresh round of layoff announcements brought little hope for a quick turnaround.
U.S. companies announced 241,749 layoffs last month, Chicago employment firm Challenger, Gray & Christmas Inc. reported. That was the highest one-month layoff total since January 2002 and 222% higher than the 75,000 job cuts announced in the first month of 2008, the firm said. It was the fourth-highest total since the firm began tracking layoff announcements in 1993.
Although retailers topped the list with almost 54,000 job cuts, the report noted that the losses were spreading through other areas of the economy.
“The variety of industries represented among the top five job-cutting sectors in January is further evidence of how far the impact of this recession has spread,” said John A. Challenger, the employment firm’s chief executive.
“Industries that at first appeared to be immune to downturns, such as computer and pharmaceutical, are now rapidly shedding workers,” he said.
Just this week, department store operator Macy’s Inc. said it planned to cut 7,000 jobs in anticipation of a sluggish retail environment this year. PNC Financial Services Group said it planned to cut 5,800 jobs, and airplane maker Hawker Beechcraft Corp. said 2,300 employees would lose their jobs before the end of the year and warned more layoffs may be coming.
As politicians in Washington weighed a stimulus package to boost the economy, the layoff toll grew Wednesday with news of 460 job cuts at Botox maker Allergan Inc., 1,500 at real estate title insurer Fidelity National Financial Inc., 1,250 at Time Warner Cable Inc., 600 at video game maker THQ Inc. and 1,000 at Hudson’s Bay Co., Canada’s largest retailer.
Investment firm Pacific Investment Management Co. of Newport Beach and Lazard Ltd., one of the last big investment banks left on Wall Street, also announced staff cuts.
“Unfortunately, there is no light at the end of the tunnel yet,” Challenger said. “Even if the stimulus package is successful, it could take months to make a noticeable impact on the employment picture.”
The report adds to recent glum news about the U.S. job market. In December, the government reported, the nation’s unemployment rate hit 7.2%. And last week, the number of workers filing for unemployment benefits hit an all-time high of 4.78 million.
Companies have been shedding jobs in reaction to the worst economic downturn since the early 1980s.
The twin calamities of a collapsing housing market and a global credit crisis have put the clamps on spending by businesses and consumers. As orders dry up, companies trim payrolls to cut costs. As workers lose their jobs or worry that they might, they cut back on spending, which continues the cycle.
Among states, New York had the highest number of announced layoffs with almost 48,000, in part due to cutbacks in the beleaguered financial services industry, Challenger Gray reported. The report noted, however, that job losses at investment banks and other financial-services firms appeared to be slowing.
“If there is any bright spot in the latest job-cut data, it is the fact that financial firms announced only 1,458 job cuts in January,” Challenger said. “That is the lowest one-month total for that industry since 2005. Whether that is a sign of lower job cuts to come or simply a fluke remains to be seen.”
Other states with big January job losses were Massachusetts, Illinois, Virginia and California -- where almost 15,000 job cuts were announced.
January is traditionally the heaviest downsizing month, in part because retailers cut back payrolls after the busy Christmas shopping season. That trend was particularly pronounced this year after the sector suffered through its worst holiday season in 40 years.
The layoff announcements dwarfed news of hirings, Challenger Gray reported. Slightly fewer than 24,000 hirings were announced last month, the firm found, and more than half of those were by government or nonprofit agencies.
A trade group said Wednesday that the nation’s service sector contracted at a slower pace in January compared with December. Although the Institute for Supply Management said new orders and production rose in the sector last month, an index of service-sector employment fell.
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