Employers in the U.S. announced more job cuts in June than a year earlier, the first increase since February and a sign the labor market is struggling to improve.
Planned firings rose 5.3 percent to 41,432 last month from June 2010, according to figures released today by Chicago-based Challenger, Gray & Christmas Inc. Job-cut announcements were led by government agencies.
The figures are consistent with others indicating weaker demand in the first half of 2011 has prompted some companies to trim their workforces. Employers in June probably boosted payrolls at a pace that failed to reduce the jobless rate, according to a Bloomberg News survey before a report in two days.
“The employment picture remains a bit cloudy,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Hiring is coming in spurts and is not quite robust enough to make a significant dent in unemployment.”
Announced job reductions in the first half of 2011 were down 17 percent from the same period in 2010. Compared with May, job-cut announcements climbed 12 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.
Government and non-profit agencies led the firings with 10,176 announcements in June. Government job cuts in the first six months of 2011 totaled 77,591, down from 99,676 firings at the same time in 2010.
Cuts in Connecticut
Connecticut Governor Dannel Malloy announced a plan last week to cut about 6,500 jobs after workers rejected a proposal to close the state’s $1.6 billion budget gap that would include some union pay and benefit concessions. Union leaders have until Aug. 31 under the proposal to revive the concession deal and avoid job cuts.
Today’s report showed California led all states with 3,090 announced job cuts in June, followed by Texas with 2,945.
Hiring plans picked up in June, the report showed. Employers announced plans to add 15,498 workers, up from 11,732 in the same month last year.
Payrolls climbed by 100,000 workers in June, after a 54,000 increase that was the smallest in eight months, a Labor Department report is expected to show on July 8, according to the median forecast of a Bloomberg News survey. Economists predict the unemployment rate will remain at 9.1 percent in June.
Cuts at Gannett
The slow economic recovery is part of the reason Gannett Co. is eliminating about 700 jobs in its community-newspaper unit, Bob Dickey president of Gannett’s U.S. community publishing division said in a memo. Bethesda, Maryland-based Lockheed Martin Corp. also announced that it will fire about 1,500 employees from its aeronautics business unit.
The aerospace and defense industry has announced 20,857 planned firings so far in 2011, compared with 6,121 in the same period a year ago, according to today’s report.
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.
© Copyright 2015 Bloomberg News. All rights reserved.