The number of announced layoffs by U.S.-based companies surged in September from the previous month, and Hewlett-Packard's outsized cuts raise a red flag, John Challenger, CEO of Challenger, Gray & Christmas, told CNBC.
"It's interesting that we are beginning to see some big layoff announcements this year," he said. "One of the things you start to see as you get near the end of a period of expansion, but before it really turns, is you start to see major layoffs occurring, big mega-layoffs like we're seeing now."
U.S.-headquartered companies put 58,877 jobs on the chopping block last month, up 43 percent from just more than 41,000 in August and the third highest monthly total this year, Challenger's global outplacement firm
Art Cashin, director of NYSE floor operations for UBS, said the layoffs are part of the financial engineering market watchers have seen U.S. corporations engage in.
"You buy back your own shares, you take a look around, you can't get revenues up, and you start to pare back some of the help," he told CNBC. "It's unfortunate, but we've been seeing it despite the quote, unquote recovery that we're in."
Despite steady hiring in the U.S. this year, international risks threaten to dent growth and depress inflation, as Federal Reserve policy makers noted in September when they delayed raising interest rates. With the central bankers meeting again later this month, all eyes will be on how much the job-market scorecard bolsters the case for the Fed to move, Bloomberg News reported.
Employers probably added about 200,000 workers in September, according to the median forecast in a Bloomberg survey of economists, after a gain of 173,000 in August. The average monthly advance so far this year is 212,000, a slowdown from last year's tally of 260,000 that was the best since 1999.
The unemployment rate will probably hold at 5.1 percent, the Bloomberg survey shows, matching August as the the lowest reading since April 2008. It's inching closer to the 4.9 percent that Fed officials now consider consistent with maximum employment.
However, TrimTabs Investment Research indicates that its estimates show that only 149,000 payrolls were created in September, 24/7 Wall St.com reports.
If correct, that 149,000 would be the lowest monthly job growth since February 2014, when a mere 135,000 jobs were added to the economy.
TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury, and they are taken from the 142 million U.S. paychecks that are subject to withholding. TrimTabs noted that its estimates are not subject to major revisions
“Turmoil in financial markets and emerging economies seems to be having a negative knock-on effect on the U.S. economy. Employment growth this month was much lower than the 241,000 jobs in August. … Market volatility, modest job growth, and softness in manufacturing suggest the Federal Reserve won’t raise rates any earlier than December. If asset prices don’t rebound, the Fed will likely stay on hold well into next year,” the website quoted a TrimTabs
research note as saying.
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