Job cuts announced by U.S. employers increased in December from the prior year’s decade low.
Planned firings rose 31 percent to 41,785 last month from 32,004 in December 2010, which were the fewest since June 2000, according to Chicago-based Challenger, Gray & Christmas Inc. Job cuts totaled 606,082 for all of 2011, up 14 percent from the previous year, the report showed.
Government and financial services accounted for four of every 10 announcements last year, and the areas will probably struggle this year as federal agencies try to reduce budget deficits and the European debt crisis threatens to cut off credit, the report said. At the same time, the year’s total was less than half the recession peak of 1.29 million firings announced in 2009.
“While several other sectors saw increased job cuts, the pace of downsizing in most industries is still well below recession levels,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “But even as job cuts remain low in most sectors, employers still appear reluctant to add jobs. Job creation is likely to remain slow and steady in 2012.”
Compared with November, job-cut announcements decreased 1.6 percent, dropping to the lowest level since June. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.
Financial institutions led the December job cuts with 7,433 announced reductions, according to Challenger. Industrial goods producers followed with 6,621.
Throughout all of 2011, government agencies cut 183,064 positions, the most in data going back to 2002. Financial institutions planned to fire 63,624 employees last year, almost three times the total in 2010.
New York led all states with 10,000 announced job cuts last month, followed by Minnesota with 4,713. Employers in the District of Columbia announced the most job reductions during 2011, trimming headcounts by 98,676. California was second with 62,500.
Today’s report also showed that employers announced plans in December to hire 14,074 workers, down from 63,527 the prior month, as holiday staffing drew to a close.
Employers probably expanded payrolls by 150,000 workers in December as the jobless rate climbed 8.7 percent from 8.6 percent, according to the median forecast in a Bloomberg News survey of economists. The Labor Department will release the figures tomorrow.
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.
© Copyright 2014 Bloomberg News. All rights reserved.