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Monthly Job Cuts Hit Five-Year High

Businesses cut nearly 113,000 people from employment rolls

By Mark Huffman
ConsumerAffairs.com

November 6, 2008

Personal Finance • Staying Healthy in a Sick Economy • Consumer Confidence Sinks to Historic Low • How Retirees Can Survive the Bear Market • Are Men Hardwired to Overspend? • Shopping Poll Holds Bad News for Retailers • 533,000 Jobs Lost in November • Feds Report More Signs of Recession • Consumer Confidence Rebounds in November • Cheap Oil May Be Economic Stimulus • Job Security Lacking This Holiday Season • An Upside to the Down Market: A Lower Tax Bill • Americans Tap Savings to Cope with Economy • Economists' Panel Sees Prolonged Recession --- • More Personal Finance News

More people were standing in the unemployment line last month, and by historical standards, that line was pretty long.

According to the latest downsizing report from outplacement consultancy Challenger, Gray & Christmas, Inc., job cuts soared to the highest level in nearly five years, as employers announced plans to slash 112,884 workers from their payrolls in October.

Heavy downsizing in the financial and automotive sectors contributed to a 19-percent increase from a September job-cut total of 95,094. October cuts were 79 percent higher than a year ago, when employers announced plans to cut 63,114 jobs. Last month's total was the largest since 117,556 job cuts were announced in January 2004.

Employers have now announced 875,974 job cuts in 2008. That is 14 percent more than the 768,264 in all of 2007. And it represents the largest 10-month total since 2003, when job cuts reached 1,043,954 in October.

The financial and automotive sectors led October job cuts with 17,949 and 15,692 announced cuts, respectively. These two industries have now combined for 239,760 firings in 2008 -- more than one-fourth of all job cuts.

However, these are not the only sectors that are struggling as the downturn ripples through the entire economy. Of the 25 industry categories tracked by Challenger, 18 have experienced an increase in job cuts.

The transportation sector has seen the biggest jump in reductions, increasing 245 percent from a 10-month total of 19,377 in 2007 to 66,876 in 2008. Job cuts in the aerospace and defense industry have increased 162 percent from 8,377 to 21,969. Media companies and entertainment companies have experienced job-cut increases of 127 percent and 123 percent, respectively.

Ironically, the financial sector is actually one of a handful of industries that has seen job cuts decline. The 129,150 financial job cuts through October are down eight percent from the 140,442 cuts announced at this point last year.

"The fact that nearly three out of four industry categories are cutting more jobs is proof of how widely the impact of this downturn has spread, "said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

A year ago, job cuts were concentrated in the financial sector and home-building industries. They are now rising across the board.

"In fact, October represented the biggest job-cut month of the year for several industries, including industrial goods manufacturing, consumer products, pharmaceutical, food and electronics," said Challenger.

That job cuts reached a five-year high in October is an ominous sign. Year-end job cuts are typically higher at other times of the year, but the fact that October was significantly higher than recent years suggests that companies not only have been hit hard by this downturn, but they do not see a rebound anytime in the near future.

"Even if the economy begins to rebound in the spring or summer, it could be months before we start to see net gains in employment and a decline in the unemployment rate," Challenger pointed out. "Job seekers who wait for signs of positive job growth will have to explain at least six to 10 months of joblessness to prospective employers. Meanwhile, the perfect job may have been right under his or her nose."

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