While many employers continue to slowly add to their payrolls, others are trimming their workforces considerably. Payroll processor ADP reported on Wednesday that private sector U.S. employment rose by 179,000 jobs in May. What ADP didn’t say was that, according to outplacement consultancy Challenger, Gray & Christmas, U.S. companies and governments cut 52,961 jobs.
The announced job cuts represent the highest monthly total since February 2013, when 55,356 job cuts were recorded, says Challenger. The number of payroll reductions were 31 percent higher than a year ago and increased for the second consecutive month (see chart at bottom of story).
The high-tech sector did the most downsizing in May, with 18,799 positions cut. A bulk of them came from Hewlett-Packard, which announced it was letting go of 16,000 workers. The next-highest job cut totals came from transportation (6,884), health care/products (3,919), government (3,248) and services (2,728). So far this year, U.S. employers have announced 214,600 job cuts, down 2.3 percent from last year. Again, the computer industry leads with 29,863 job cuts, follwed by retail, with 25,696 job cuts announced in 2014. (“Retail job cuts are down slightly from a year ago when [those] employers announced 32,683 job cuts from January through May,” according to Challenger, Gray & Christmas.)
“Five-figure job-cut announcements, such as Hewlett-Packard’s last month, have been rare since the recession ended in 2009,” according to a statement from the outplacement firm’s CEO, John A. Challenger. “The last time we saw a figure on this scale was February 2013, when JP Morgan Chase announced a large reduction in the number of bankers in its mortgage unit, most of whom were hired in the wake of the recession to deal with the flood of foreclosures and the refinancing of troubled loans.”
The top reasons for May’s job cuts, said Challenger, Gray & Christmas, were restructurings, business closings, cost cutting and demand downturns.
Challenger said the firm doesn’t expect any surge in downsizing for the rest of 2004, “unless there is a sudden and severe shock to the economy.”
On Wednesday, the Federal Reserve reported in its Beige Book that labor market conditions had “generally improved” since its April economic report.
“The Boston, New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis and Dallas Districts indicated that employment levels were flat to up modestly,” read the Beige Book. “Philadelphia reported that some new hiring occurred but noted that firms remain cautious, while improvement in the labor market has led to increased competition for workers in the Kansas City District. Contacts in the Cleveland and Chicago Districts noted an increase in demand for some temporary workers, while the Atlanta District reported a small increase in workers transitioning from temporary to permanent positions.”
Several of the Fed districts reported that “employers were having difficulty finding skilled workers,” and that wage pressures in some fields were rising as a result. The Bureau of Labor Statistics reveals its job growth numbers on Friday. Economists expect employers added 210,000 jobs but forecast that the unemployment rate would inch up to 6.4 percent.