Despite a national unemployment rate in the neighborhood of 8 percent, the 12-month job-cut total for 2012 is at the lowest level since 1997.
The latest report from outplacement consultancy Challenger, Gray & Christmas, Inc., shows employers cut 523,362 last year -- the lowest year-end total since 1997, when employers announced 434,350 job cuts. The 2012 total was also 14 percent lower than the 606,082 job cuts announced in 2011.
Meanwhile, after three consecutive months of increased job-cutting activity, the number of planned reductions announced in December plunged to 32,556 -- the second lowest monthly total of the year.
The December total was 43 percent fewer than the 57,081 November cuts and 22 percent lower than a year ago, when employers announced 41,785 cuts. The only month in 2012 to see fewer job cuts than December was August, when job cuts totaled 32,239.
Despite the December decline, planned terminations in the fourth quarter were up 33 percent from the previous quarter. Employers announced 137,361 job cuts in the final three months of year, compared to 102,910 in the third quarter. The third-quarter total was the lowest quarterly total since 81,568 job cuts were announced in the second quarter of 2000.
“We saw a few spikes in monthly job cuts in 2012 and there were some significant mass layoffs that definitely reminded us that not every industry is enjoying the fruits of recovery,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. “However, the overall pace of downsizing was at its slowest since the end of the recession. In fact, we have not seen this level of job cutting since before the dot.com collapse and subsequent 2001 recession.”
One of these significant mass firings occurred in December, when banking giant Citigroup announced 11,000 job cuts early in the month. The Citigroup announcement accounted for the majority of the 11,355 job cuts announced last month in the financial sector, which was the top job-cutting sector in December. The transportation sector was a distant second with 4,844 job cuts.
The leading job-cut sector for the year was the computer industry, with a total of 46,164 announced terminations since January. That marks a 215 percent increase from 2011, when these firms announced 14,677 job cuts. It is worth noting that nearly 60 percent of the computer cuts in 2012 were the result of the May job-cut announcement from Hewlett-Packard impacting 27,000 workers.
The transportation sector, which was the second leading job-cut sector in December, was also the second largest job cutter for the year. The 42,107 job cuts announced by these firms in 2012 were up 189 percent from 14,584 planned cuts in 2011.
Declines in cuts
While a handful of industries experienced increased downsizing in 2012, several sectors, including construction, retail, financial services, and aerospace and defense saw decreased job-cut activity. Perhaps the most dramatic decline occurred in the government sector, where job cuts plunged 90 percent from an industry-leading 183,064 in 2011 to just 19,128 in 2012.
“The fact that the top job-cutting industry in 2011 shed nearly 190,000 workers while the top job cutter this year did not even crack 50,000 reveals a lot about where we are in this recovery. Despite the uncertainty related to the fiscal cliff, which has now been averted thanks to a last-minute deal, employers held steady in the final months of the year and avoided a surge in mass layoffs,” said Challenger.
According to the latest available data from the Bureau of Labor Statistics, private-sector payrolls achieved net gains averaging 154,000 new workers each month through November 2012. Overall, private-sector employment increased by 1,697,000 new workers from January through November. That remains well off the pre-recession peak, which in 2005, saw private-sector payrolls increase by an average of 193,000 new workers per month for an annual total of 2,312,000 new jobs.
“Friday’s report on December employment could show a hiring boost from construction and other new jobs related to post-hurricane clean-up efforts on the East Coast,” said Challenger. “Late holiday season hiring may also show up in retail employment numbers. However, with one report indicating that holiday retail sales were weaker than expected, we could see a purging of retail workers in future employment reports.”
In 20 full years of tracking since 1993, January has been the top job-cut month of the year nine times. The next closest month is December, which has been the top job-cut month just three times. Since 1993, job cuts have averaged 101,084 in January. The second largest monthly average over the same period is 80,321 job cuts in October.